Do anyone know the answer to this?
2 answers:
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Answer:
<em>It will take 14 years before the investment triples</em>
Step-by-step explanation:
<u>Continuous Compounding</u>
Is the mathematical limit that compound interest can reach if it was calculated and reinvested into an account's balance over a theoretically infinite number of periods.
The formula for continuous compounding is derived from the formula for the future value of a compound interest investment:
Where:
FV = Future value of the investment
PV = Present value of the investment
i = Interest rate
t = Time
It's required to find the time for an investment to triple, that is, FV = 3 PV, knowing the interest rate is i=8%=0.08.
Substituting the known values:
Dividing by PV:
Taking logarithms:
Solving for t:
t = 13.7 years
Rounding up:
It will take 14 years before the investment triples