SOLUTION: How long will it take to double an investment compounded continuously at a rate of 7%?
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Question 817151: How long will it take to double an investment compounded continuously at a rate of 7%?
Answer by lwsshak3(11628) (Show Source): You can put this solution on YOUR website!
How long will it take to double an investment compounded continuously at a rate of 7%?
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Formula for continuous compounding:
A=Pe^rt,P=initial investment,r=interest rate, A=amount after t-years.
For given problem:
A/P=2
2=e^rt
take log of both sides
ln2=rtlne
lne=1
t=ln2/r=ln2/.07=9.9yrs
It will take about 10 yrs to double the investment.
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