Question

A promissory note will pay $49,000 at maturity 7 years from now. If you pay $24,000...

A promissory note will pay $49,000 at maturity 7 years from now. If you pay $24,000 for the note now, what rate compounded continuously would you earn?

The investment would earn about ___% compounded continuously. (round to three decimal points as needed).

Homework Answers

Answer #1

the formula is:-

,

where, A = amount

P = principal

t = time in years.

r = rate of interest.

here, given data are:-

P= $ 24000

Q= $ 49000

t = 7 years

so, according to the formula we have,

so, r = 0.10197*100% = 10.197 %

The investment would earn about 10.197 % compounded continuously.

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