At what interest rate, compounded continuously, should $2,500 be invested today so that 10 years from now the account will be worth $5,000? Round your answer to two decimal places.
A) 13.86%
B) 0.07%
C) 3.47%
D) 6.93%

Question

Quizplus · Accepted Answer

The formula for continuous compounding is A = Pe^(rt), where A is the amount, P is the principal, r is the rate, and t is the time. Solving for r: 5000 = 2500e^(10r), gives r ≈ 0.0693 or 6.93%.

At What Interest Rate, Compounded Continuously, Should $2,500 Be Invested