Question

How long will it take to triple a sum of money if it is invested at a rate of 6.25% compounded continuously? Round your answer to 2 decimal places.

Answer 1

So the answer is approximately 18 years

Explanation:

Your interest rate is 6.25%, or, 0.0625

A=P⋅(1+(r/n))^nt

Where:

P is the initial amount

r is annual rate of interest

t is number of years

A is the final amount of money

n is the number of times the interest is compounded per year

So

3P=P(1+0.0625)

3P=P (1.0625)^t

3=1.0625^t

Now we should use logarithmic functions.

ln(3)=t⋅ln(1.0625)

ln(3)ln(1.0625)=t

t=18.12 years