Homework Help: Pre-Cal

Posted by Nick on Wednesday, February 29, 2012 at 3:45am.

If the interest on a long-term Canadian(3/8%) investment is compounded continuously, how long will it take the value of an investment to triple? (Give the answer correct to two decimal places.)

Got 19 years--its wrong, can't find reason.

Thanks.

Pre-Cal - drwls, Wednesday, February 29, 2012 at 5:26am
With continuous compounding,

A = A0*e^(r*t) = 3 A0
where A0 is the inityial principle,
r is the annual interest rate (0.375%)
t is the period of investment, in years.
e^(rt) = 3
rt = ln3 = 1.099
t = 1.099/0.00375 = 293 years

That's a pretty bad investment. Worse that US long term treasuries at current rates.

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