SOLUTION: If interest is compounded continuously and the interest rate is tripled, what effect will this have on the time required for an investment to double?
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Question 301722: If interest is compounded continuously and the interest rate is tripled, what effect will this have on the time required for an investment to double? Answer by stanbon(75887) (Show Source):
You can put this solution on YOUR website! If interest is compounded continuously and the interest rate is tripled, what effect will this have on the time required for an investment to double?
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Let interest be "r":
A(t) = P*e^(rt)
Doubles when e^(rt) = 2
rt = ln2
t = (ln(2))/r
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Let interest be "3r"
A(t) = P*e^(3rt)
Doubles when e^3rt = 2
3rt = ln2
t = (1/3)(ln(2))/r
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The time when the rate was "r" is divided by 3.
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Cheers,
Stan H.
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