Problema Solution
How long does it take for $3925 to double if it is invested at 5% compounded continuously? Round your answer to two decimal places.
Answer provided by our tutors
P = $3925
r = 0.05 the rate as a decimal
A = 2P
t = the time in years
Continuous compounding future value formula is:
A = P*e^(rt)
We plug the values in the formula above:
2P = P*e^(0.06*t)
e^(0.06*t) = 2
0.06*t = ln(2)
t = (1/0.06)ln(2)
t = 11.55 years
It will take 11.55 years for the amount to double.