Answer:Interest rate must be R = 6.04%
Explanation:
When an investment earns interest compounded continuously it means interest is earned constantly, Compound interest is usually calculated on monthly, quarterly semi annual and annual intervals. Continuous compounding is theoretical concept which aims to calculate interest at the smallest possible interval.
Future Value = $17200
Present Value = $14014
n = 4
Future Value = Present Value x e^rn
$17200 = $14014 x e^(r x 4)
e^(r x 4) = 17200/14014
e^(r x 4) = 1.2273440845
e = 2.7182818285
(2.7182818285)^(r x 4) = 1.2273440845
(r x 4)log(2.7182818285) = log(1.273440845)
r x 4 = log(1.273440845)/log(2.7182818285)
r x 4 = 0.2417225636
r = 0.2417225636/4 = 0.0604306409
R = 6.04%
