Rate of interest by which amount $181.25 becomes $1450 in 7 years by continuous compounding will be 29.71%.
Rule for the continuous compounding:
- Expression for the final amount comounded continuously is given by,
Final amount = [tex]Pe^{rt}[/tex]
Here, P = Principal amount
r = Rate of interest
t = Duration of investment
Given in the question,
P = $181.25
t = 7 years
Final amount = $1450
Substitute these values in the expression,
[tex]1450=181.25e^{7r}[/tex]
[tex]e^{7r}=8[/tex]
[tex]\text{ln}(e)^{7r}=\text{ln}(8)[/tex]
[tex]7r=2.07944[/tex]
[tex]r=0.2971[/tex]
[tex]r=29.71\%[/tex]
Therefore, rate of intereset for the investment is 29.71%.
Learn more about continuous compounding here,
https://brainly.com/question/13079114?referrer=searchResults
