Question 73827: Here is the second question can you help me again? A commonly asked question is, "How long will it take to double money?" At 10% interest rate and continous compounding, what is the answer? Round to the hundredth's place.
Answer by ankor@dixie-net.com(22740)   (Show Source):
You can put this solution on YOUR website! Here is the second question can you help me again? A commonly asked question is, "How long will it take to double money?" At 10% interest rate and continous compounding, what is the answer? Round to the hundredth's place.
:
The continuous interest equation:
P*e^(r*t) = A
:
Make it easy, let P = 1, then A = 2, r = .1; find t
e^.1t = 2
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Find ln of both sides:
.1t = ln(2); (remember ln of e is 1)
:
.1t = .6931472
t = .6931472/.1
t = 6.93 yrs
:
:
Check using a calc:
e^(.1*6.93)
e^(.693) = 1.9997, slightly lower because we rounded it off.
:
How about this? Did it make sense to you?
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