Thor invests $3000 in an account, with interest compounded continuously. If his investment doubles in value after 7.2 years, what interest rate is he earning? [Use the formla A = Pert and round answer to the nearest tenth.]

Question

anonymous · Answer

Can use rule of 72 to estimate:

Approximate doubling time = 72 ÷ APR%
If doubling time = 7.2 years, then APR must be almost exactly 10%.

Using Pert, $\large 2=e^{rt}$
Take natural log of each side to solve for t.