Question

Modeling Compound Interest In Exercise, complete the table for an account in which interest is compounded continuously.

Amount Amount
Initial Annual Time to after 10 after 25
investment rate double years years
$15,000 $18,321.04

Answer 1

This problem requires us to calculate the value of investment after 25 and effective rate of return. Investment value after 10 years and initial investment amount is given in the question.

Rate of return (r)

18,321.04 = 15,000(1+r)^10

Log 1.22 = 10 log(1+r)

r = 2%

Value of investment after 25 year = 15,000(1+2%)^25 = $ 24,609