Wednesday
March 29, 2017

Post a New Question

Posted by on .

How long will it take for an investment to double in value if it earns 9.5% compounded continuously?

  • Math - ,

    For r=0.095, with normal compound interest, compounded yearly, the number of years to double at a rate of r% is ln(2)/ln(1+r)=ln(2)/ln(1.095)=7.638 years.

    from A=P(1+r)^n
    take ln both sides,
    ln(A/P)=n ln(1+r)
    n=ln(2)/ln(1+r)

    With continuous compounding,
    A=Pern
    Take logs
    ln(A/P)=ern
    ln(2)=rn
    n=ln(2)/r
    =ln(2)/0.095
    =7.296 years

Answer This Question

First Name:
School Subject:
Answer:

Related Questions

More Related Questions

Post a New Question