Suppose 1500 is invested at interest rate of 4.25% compound continuously after how many years will investment be doubled

Answer 1

Hello April,

Since the problem calls for compounding 'continuously', we want to use the formula, A = Pe^{r t},

where A is the final amount, and P is the initial amount invested.

Since we want to double our investment, A = 2P.

Substituting that in, we get

2P = Pe^{r t}

→ 2 = e^{r t}

→ ln(2) = r * t

→ t = ln(2) / r.

We are told that r = 4.25% = .0425

→ t = ln(2) / .0425

→ t ≈ 16.3 years.

Thank you for the question!

Michael E.