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March 24, 2017

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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 - ,

    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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