using continuous compound interest formula find the indicated value
A= 15625
P= 10900
T= 60months
R= ?
Same as previous problem, solve for R instead of T.
To find the value of R using the continuous compound interest formula, we can rearrange the formula and solve for R.
The continuous compound interest formula is given by:
A = P * e^(R * T),
where:
A represents the final amount,
P represents the principal amount,
R represents the interest rate,
T represents the time in years, and
e is Euler's number, approximately equal to 2.71828.
In your case, you have:
A = 15625 (final amount)
P = 10900 (principal amount)
T = 60 months (5 years)
R = ? (interest rate)
To find the interest rate R, we can rearrange the formula as follows:
R = ln(A / P) / T,
where ln denotes the natural logarithm.
Now, let's substitute the given values into the formula:
R = ln(15625 / 10900) / 5,
Using a calculator, we can evaluate the expression:
R ≈ ln(1.43349) / 5 ≈ 0.099945.
Therefore, the interest rate R is approximately 0.099945, or 9.9945%.