Question

A sum is invested at 4% continuous interest. This means that its value grows exponentially with k equaling the decimal rate of interest. Find, to the nearest tenth of a year, the time required for the investment to double in value.

Answer 1

T = 72/4 = 18years

T = 20years (to the nearest tenth)

Explanation:

Using the rule of 72, which is used to estimate the number of years for a given investment to double at a given interest rate.

Doubling time = 72/interest rate

T = 72/r

Rate r (in percentage) = 4%

Time T (in years)

T = 72/4 = 18years

T = 20years (to the nearest tenth)