Question 189926: The problem is:
Assume the cost of a loaf of bread is $4. With continuous compounding, find the time it would take for the cost totriple at an annual inflation rate of 6%.
This seemed simple at first and I can figure it out the long way by compounding the interest each year, but I know there must be a formula I can set up to plug in and get the answer much quicker - thanks for your help!
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! Assume the cost of a loaf of bread is $4. With continuous compounding, find the time it would take for the cost to triple at an annual inflation rate of 6%.
--------------------------------------
A(t) = A(0)(1+r)^t
3*4 = 4(1.06)^t
---
3 = (1.06)^t
Take the log of boh sides to get:
t*log(1.06) = log3
t = (log3)/(log1.06)
t = 18.85 years
===============================
Cheers,
Stan H.
|
|
|
