Problema Solution
Suppose $5700 is invested in an account at an annual interest rate of 6.8% compounded continuously. How long ( to the nearest tenth of a year) will it take the investment to double in size?
Answer provided by our tutors
Let
P = $5,700 the principal (the investment)
t = the time in years
r = 0.068 or 6.8% the annual interest rate
A = 2P the future value (the investment will double in size)
the future value formula is:
A=Pe^(rt)
2P= Pe^(0.068t)
e^(0.068t) = 2
........
........
t = 10.2 years
It will take 10.2 years for the investment to double in size.