Answer to Question #196932 in Financial Math for Beauty Magadlela

Question

If R35 000 accumulates to R48 320 at a continuous compounded rate of 8,6% per year, then the term under consideration is .... years.

[1] 6,23

[2] 2,77

[3] 4,43

[4] 3,91

[5] 3,75 

Answer 1

$S=Pe^{ct}$

$48320=35000e^{0.086t}$

$\frac{48320}{35000}=e^{0.086t}$

$ln(48320/35000)=lne^{0.086t}=0.086t\space lne$

$\frac{ln(48320/35000)}{0.086}=t$

$t=3,74997$

So, the term under consideration is $3,75$