SOLUTION: An investment with interest compounded continuously doubled itself in 16yr. What is the interest rate? How do you work this problem
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Question 328011: An investment with interest compounded continuously doubled itself in 16yr. What is the interest rate? How do you work this problem
Answer by solver91311(24713) (Show Source): You can put this solution on YOUR website!
The formula for continuous compounding is:
If the investment doubles, then
That means that, for 
,
Take the natural log of both sides:
\ =\ \ln(2))
Use:
\ =\ n\log_b(x))
To write:
\ =\ \ln(2))
Use:
\ =\ 1)
To write:
)
}{16}\ \approx 4.33%)
My calculator said it, I believe it, that settles it.
John
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