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Suzy has $2000 to invest and needs $2400 in 12 years. What annualrate of return will she need to get in order to accomplish her goal, if theinterest is compounded continuously? (Round your answer to twodecimal places) A = Pert



Answer :

Given data:

Principal Amount=$2000.

Final Amount=$2400

Time period(t)=12 years

Let the rate of return be r.

As per formula of continous compunding:

[tex]\begin{gathered} \text{Final amount=Principal}(e^{rt}) \\ 2400=2000(e^{12r}) \\ e^{12r}=\frac{2400}{2000} \\ e^{12r}=1.2 \\ 12r=\ln (1.2) \\ 12r=0.1823 \\ r=0.01519 \end{gathered}[/tex]

Thus, the rate of interest required is 1.519%.

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