SOLUTION: how long would $5000 need to be invested at 3 and 1/4 % compounded continuously to double?
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Question 404660: how long would $5000 need to be invested at 3 and 1/4 % compounded continuously to double?
Answer by lwsshak3(11628) (Show Source): You can put this solution on YOUR website!
how long would $5000 need to be invested at 3 and 1/4 % compounded continuously to double?
..
The formula for interest compounded continuously:
A=Pe^rt, A=amount after t years, P=amount invested, and r=annual interest rate
for given problem,
A=5000e^.0325*t
since we want to double our investment A=10000
10000=5000e^.0325*t
from here we could solve for t in the usual way, but you might note that you do not need to know the dollar amounts. The formula could be written as follows if you just want to know how many years are required to double your investment:
2=e^.0325t
ln2=(.0325t)lne
t=ln2/.0325=21.33 years
ans:
It would take 21.33 years to double your investment if interest is compounded continuously at the annual interest rate of 3.25%
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