Do I use the simple interest equation: I=Prt?!!

Thank you!!

- Thread starter Goods
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Do I use the simple interest equation: I=Prt?!!

Thank you!!

- Joined
- Dec 15, 2005

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- 2,396

\(\displaystyle \L A = A_0 e^{rt}\)

where A = account balance at any time t in years

A<sub>0</sub> = initial account balance at t = 0

e = base of the natural log, approx 2.718281828459045...

r = interest rate per year as a decimal

t = time in years

for your problem, substitute in the known values ...

\(\displaystyle \L 3A_0 = A_0 e^{r*8}\)

\(\displaystyle \L 3 = e^{r*8}\)

\(\displaystyle \L ln(3) = r*8\)

\(\displaystyle \L \frac{ln(3)}{8} = r\)

r = approx 13.7 % APR

- Joined
- Apr 12, 2005

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- 10,030

No.Goods said:..."the interest is compoundedcontinuously."

"Do I use thesimpleinterest equation: I=Prt?!!"

e^(8r) = 3

r = .1373265360835...

Interest compounds every second on a 365 days basis (p = 365*24*60*60):

(1 + r/p)^(8p) = 3

r = .1373265363798...

Put 'em together for a "look":

13.7326536 0835...%

13.7326536 3798...%

Ahem