Posted by Nick on .
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.
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.