Algebra II

An investment service promises to triple your money in 12 years. Assuming continuous compounding of interest, what rate of interest is needed?

For the question is it asking me if simple interest or continuously compounded interest is needed?


Is it asking for a number in the rate of interest like .06 ?

Also, would anyone know which equation I should use? 1) Exponential Growth
2) Af=A0((1)+(r/n))^nt
3) A=Pe^rt

I think it's A=Pe^rt (Continuous Growth) or maybe Af=A0((1)+(r/n))^nt (Compound Interest)

  1. 👍
  2. 👎
  3. 👁
  1. Also could anyone type in the answer they got.

    Thank You.

    1. 👍
    2. 👎
  2. Investment companies usually do not deal in continuous compounding of interest, usually they are quoted as compounded annually, compounded semi-annually, compounded monthly or something like that.

    let's assume an annual interest rate, so we would have

    3 = (1+i)^12
    take 12th root of both sides

    3^(1/12) = 1+i
    1+i = 1.09587
    i = .09587 or 9.587% per annum

    for continuous growth

    3 = e^(12r)
    12r = ln3
    r = ln3/12 = .09155 or 9.155%

    1. 👍
    2. 👎

Respond to this Question

First Name

Your Response

Similar Questions

  1. math

    The value of an investment A (in dollars) after t years is given by the function A(t) = A0ekt . If it takes 10 years for an investment of $1,000 to triple, how many years will it take for the investment to be $9,000? Simplify your

  2. Interest

    You deposit $4000 in an account earning 5% interest compounded monthly. How much will you have in the account in 5 years? Use n=12 for monthly compounding,n=4 for quarterly compounding,n=2 for semiannual compounding, and n=1 for

  3. math

    Sally holds an investment with an interest rate of 12.3% compounded annually. How many years will it take for her investment to triple in value? 13 6 7 9 4

  4. MATH

    1. An employee put $5,000.00 in a retirement account that offers 9% interest compounded annually. The employee makes no additional deposits or withdrawals. Which amount is closest to the interest the employee will have earned at

  1. Algebra

    what is the interest rate necessary for an investment to quadruple after 5 years of continuous compound interest? I keep getting r=11%

  2. finance

    Suppose the spot rates for 1 and 2 years are s_1 = 6.3\%s 1 ​ =6.3% and s_2 = 6.9\%s 2 ​ =6.9% with annual compounding. Recall that in this course interest rates are always quoted on an annual basis unless otherwise specified.

  3. Economics

    Determine which of two investment projects a manager should choose if the discount rate of the firm is 20%. The first project promises a profit of $100,000 in each of the next four years, while the second project promises a profit

  4. Precalc

    An investment of $37,000 was made by a business club. The investment was split into three parts and lasted for one year. The first part of the investment earned 8% interest, the second 6%, and the the third 9%. Total interest from


    Randee invested $1000 for college in an account earning 5% simple interest. When she withdrew the investment, she had earned a total of $550 in interest. How long was the money invested? A 9 years B 10 years C 11 years D 12 years

  2. math

    If $400 is invested at an interest rate of 5.5% per year, find the amount of the investment at the end of 12 years for the following compounding methods. (Round your answers to the nearest cent.)

  3. algebra

    Jacob deposits $60 into an investment account with an interest rate of 4%, compounded annually. The equation, y = 60(1 + 0.04)x, can be used to determine the number of years, x, it takes for Jacob's balance to reach a certain

  4. Math

    Suppose you deposit $2000 in an account with an annual interest rate of 7% compounded quarterly. Use the formula A=P(1+r/n)^n*t and round each answer to 2 decimal places, if necessary. a. Find an equation that gives the amount of

You can view more similar questions or ask a new question.