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What constant interest rate is required if an initial deposit placedinto an account accrues interest compounded continuously is to double itsvalue in six years? `(ln|x|=0. 6930)` |
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Answer» The balance N(t) in the account at any time t, `(dN)/(dt)-kN=0`, its solution is `N(t) = ce^(kt)`………..(1) Let initial deposit be `N_(0)`. At t=0, `N(0)=N_(0)` which when substituted into equation `N_(0)=ce^(k(0))=c` and equation (1) becomes `N(t) = N_(0)e^(kt)`. We seek the value of k for which `N=2N_(0)` when t=6, substituting these values into (2) and solving for k we find `2N_(0)=N_(0)e^(k(6))`. or `e^(6k)=2` or `k=1/6In|2|=0.1155` An interest rate of `11.55` percent is required. |
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