An initial investment of $3,000 grows to $9,000 over a period of 5 years in an account with continuous compounding. What is the annual interest rate? Round your answer to the nearest two decimal places in percentage form. Use the formula A=Pert, where A is the balance (final amount), P is the principal (starting amount), e is the base of natural logarithms (≈2.71828), r is the interest rate expressed as a decimal, and t is the time in years.
Q. An initial investment of $3,000 grows to $9,000 over a period of 5 years in an account with continuous compounding. What is the annual interest rate? Round your answer to the nearest two decimal places in percentage form. Use the formula A=Pert, where A is the balance (final amount), P is the principal (starting amount), e is the base of natural logarithms (≈2.71828), r is the interest rate expressed as a decimal, and t is the time in years.
Identify Values: Identify the given values: A = 9,000P=3{,}000 t = 5 \text{ years} Use the formula A = Pe^{rt}.
Rearrange Formula: Rearrange the formula to solve for r: A=Pert9000=3000imese5r Divide both sides by 3000: 3=e5r
Take Natural Logarithm: Take the natural logarithm (ln) of both sides to solve for r: ln(3)=ln(e5r)ln(3)=5r
Simplify Calculation: Simplify using the property of logarithms: ln(3)=5rr=5ln(3)
Calculate r Value: Calculate the value of r: r = rac{ ext{ln}(3)}{5} ext{≈} rac{0.2197}{5} ext{≈} 0.0732
Convert to Percentage: Convert r to a percentage: r≈0.0732×100≈7.32%