Question

How long will it take for an investment to double in validity it earns 7.25% compounded continuously

Answer 1

In value

Answer 2

Help

Answer 3

The formula for continuous compounding is
\[A=Pe ^{rt}\]
Rearranging to find the ratio of amount after time t (A) to the principal (P)
\[\frac{A}{P}=e ^{rt}\]
Substituting the given values results in the following:
\[2=e ^{0.0725t}\]
Now you just need to solve to find t. Can you do that?

Answer 4

Not sure

Answer 5

Just take natural logs of both sides to get
ln 2=0.0725t
Then divide both sides by 0.0725 to get
\[t=\frac{\ln 2}{0.0725}\]