Compounded Continuously Question

Question

At an annual rate of 8% compounded continuously, in how many years would it take for a principal to double

Answer 1

The equation for continually compounded interest is:  A = Pe^rt, where

 

A = final amount, P = principal invested, r = rate in decimal, and e is the constant.

 

Since you want to double your investment, let A = 2p.

 

Thus makes the equation 2P = P e^.08t

 

So: 2 = e^.08t.

 

How do you solve this?  (hint:  think logs)