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May 24th, 2009, 06:11 PM   #1
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Financial Interest Question

A bank pays a nominal interest rate of 6%, continuously compounded for deposits.
What is the length of time necessary for a bank deposit of $1,000 to grow to $1,500
if the nominal continuously compounded interest rate is 6%. Choose one.
(a) 5.4350 years (b) 4.517 years (c) 7.8132 years (d) 7.7577 years

i tried by doing 1000* e^rt = 1500 (formula for continuous compounding) and get answer as 6.75 yrs????

Can anyone please tell me what am I doing wrong?
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May 24th, 2009, 06:47 PM   #2
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Re: Financial Interest Question

I think you are right. See this page.
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May 24th, 2009, 06:54 PM   #3
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Re: Financial Interest Question

Thanks...but the answer i get is not in the list????

Does anyone has any other way or please assist....am still trying but I gave it a 100% shot!!
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May 25th, 2009, 06:58 AM   #4
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Re: Financial Interest Question

Quote:
Originally Posted by ajxxx
Thanks...but the answer i get is not in the list????
Maybe the list is wrong. Perhaps this is something you should discuss with your instructor.
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May 25th, 2009, 09:00 AM   #5
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Re: Financial Interest Question

Presumably there is a misprint, and (d) is supposed to be 6.7577 rather than 7.7577?
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