Answer to Question #289378 in Economics of Enterprise for Lucy Njoroge

Question

A man wishes to have an amount of P2,769.84 after 5 years. He deposited P500 each year into a savings bank that pay “r” percent per annum compounded continuously. Compute the value of “r”.

Answer 1

This is an annuity

A=500

FV=2769.84

$2769.84=500(\frac{(1+r)^5-1}{r})$

$5.53968=(\frac{(1+r)^5-1}{r})$

$r^5-5.53968r=0$

$r(r^4-5.53968)=0$

r1=0

r2=1.53