Answer:
15.4 years
Explanation:
An investment is doubled when it is twice its initial value. The equation can be solved for the value of t that makes this true.
Setup
In the exponential equation for investment value, the factor y₀ is the initial value of the investment. We want to find t when y = 2y₀.
2y₀ = y₀·e^(0.045t)
Solution
Dividing by y₀ gives ...
2 = e^(0.045t)
Taking natural logarithms, we have ...
ln(2) = 0.045t
Dividing by the coefficient of t gives its value:
t = ln(2)/0.045 ≈ 15.4
The investment will be doubled after 15.4 years.
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Additional comment
The continuously compounded interest rate for this investment is 4.5%. The doubling time is 0.693 divided by this: 0.693/0.045 ≈ 15.4. This relationship holds for any sort of continuous compounding.