Problema Solution
You want to invest $10,000 dollars. How long will it take to double your investment at an annual interest rate of 10%, compounded continuously? (Round your answer to the nearest year)
Answer provided by our tutors
P = $10,000 the principal
t = the time in years
r = 0.10 or 10% the annual interest rate
A = 2P the future value
the future value formula is:
A=Pe^(rt)
we plug the above values and get:
2P=Pe^(rt)
e^(rt) = 2
rt = ln 2
t = (1/r) ln 2
t = (1/0.10) ln 2
t = 7 years (rounded to the nearest year)
it will take 7 years to double the investment.