Question

$5,000 was invested at 4.5% interest compounded continuously. How many years will

it take the investment to grow to $7,840? Round your answer to the nearest whole
year.

Answer 1

The continuous compounding formula is:

A = Pe^(rt)

where A is the amount after t years, P is the initial principal, r is the annual interest rate as a decimal, and e is Euler's number (approximately 2.71828).

We are given that P = $5,000, r = 0.045, and A = $7,840. We want to find t, the number of years.

We can solve for t by isolating it on one side of the equation:

A = Pe^(rt)

A/P = e^(rt)

ln(A/P) = rt

t = ln(A/P) / r

Substituting in the values we have:

t = ln(7840/5000) / 0.045

t ≈ 11

So it will take about 11 years for the investment to grow to $7,840