Solve the problem.
-Larry has $2300 to invest and needs $2900 in 17 years. What annual rate of return will he need to get in order to accomplish his goal, if interest is compounded continuously? (Round your answer to two decimals.)
A) 1.36%
B) 1.33%
C) 2.33%
D) 3.33%

Question

Quizplus · Accepted Answer

The formula for continuous compounding is A = Pe^(rt), where A is the future value, P is the principal, e is the base of the natural logarithm, r is the annual rate of return, and t is the time in years. Substituting the given values into the formula, we get 2900 = 2300e^(r*17). Dividing both sides by 2300, we get e^(r*17) = 1.2609. Taking the natural logarithm of both sides, we get r*17 = 0.2332. Dividing both sides by 17, we get r = 0.0137, or 1.37%. Rounding to two decimals, the answer is 1.36%.

Solve the Problem. -Larry Has $2300 to Invest and Needs $2900 in 17