Tuesday, December 30, 2014

If $1000 is invested in an account paying 12% annually compounded continously, how long will it take to double the investment?


For continuous compounding we use:

F=P%2Ae%5E%28r%2At%29
so we can write:

2=e%5E%280.12%2At%29

taking the natural log of both sides leads to

ln%282%29=0.12%2At

so time is about 5.78 years

No comments: