Posted by annonymous on Sunday, September 19, 2010 at 9:31am.
We calculate the amount after t=1 year at rate r under continuous compounding, and equate it to 1.078:
1.078=1*ert
take natural log on both sides:
ln(1.078)=r*1
r=ln(1.078)
=0.07511
or 7.511% p.a.
thanks
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