Compound interest problem

Question

Use either A=Pe^rt or A=P(1+r/n)^nt where A is the future value of P dollars invested at interest rate r compounded continuously or n times per year for t years.

If a couple had $80,000 in a retirement account, how long will it take the money to grow to $1,000,000 if it grows by 6% compounded continuously? Round to the nearest year.

Answer 1

Continuous compounding is:

A(t) = Pe^rt

1,000,000 = 80,000·e^0.06t

12.5 = e^0.06t

Take the natural log (base e) of both sides:

ln(12.5) = 0.06t

Can you finish it from here? Use your calculator to get the final answer (in years).