SOLUTION: 1.A sum of money placed at compound interest doubles itself in 5years. in how many years it will amount to eight times itself at the same rate of interest
2.find effective annual
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-> SOLUTION: 1.A sum of money placed at compound interest doubles itself in 5years. in how many years it will amount to eight times itself at the same rate of interest
2.find effective annual
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Question 1069102: 1.A sum of money placed at compound interest doubles itself in 5years. in how many years it will amount to eight times itself at the same rate of interest
2.find effective annual rate of interest corresponding to a nominal rate of 6%per annum payable halfyearly
You can put this solution on YOUR website! A=Aoe^rt is continuous compounding. The problem doesn't say.
A=2Ao
A/Ao=2
2=e^rt, and t is known to be 5
2=e^5r
ln both sides
ln 2=5r
r=ln2/5=13.86%
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at 8 times we then have
8=e^(13.86t)
ln of both sides
ln 8=.1386 t
t=ln 8/.1386=15.00 years
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(1+.06/2)^2=1.0609
subtract 1
0.0609 or 6.09%
