Answer:
At the given rate it will take 3 years and 5 months for the investment to be doubled
Explanation:
Here, we want to get the amount of time it will take an investment that earns 12.25% to double if it’s compounded continuously
We can have the exponential relation as follows;
P = I( 1 + r)^n
P is the present value, let us call this 2x as it two times the initial
I is the initial value which is x in this case
r is the interest rate = 12.25% which is same as 12.25/100 = 0.1225
n is the number of years which we want to calculate
Thus, we have
2x = x( 1 + 0.1225)^n
2 = 1.225^n
Ln 2 = n ln 1.225
n = ln 2/ln 1.225
n = 3.42
if 3.42 is the number of years, let us have 0.42 in months
That will be 0.42 * 12 = 5.04
So we are looking at the investment being doubled at 3 years and 5 months