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Determine the time needed for money to triple if it is invested at 4.5% compounded continuously and annually.

1 Answer

4 votes

Answer:

25 years

Explanation:

Given

Using A = P(1+r/n)^nt

Where P = Principal Amount Invested

r = rate = 4.5% = 0.045

n = annually = 1

t = years = ?

A = Amount = Triple of Principal = 3P

A = P(1+r/n)^nt becomes

3P = P(1+0.045/1)^1*t

3P = P(1.045)^t --------- Divide Through by P

3 = 1.045^t --------- Find the logarithm of both sides

Log3 = Log1.045^t

Log 3 = tLog1.045 --------- Make t the subject of formula

t = Log3/Log1.045

t = 24.9588828983670261

t = 25 (approximated)

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