Question

If $48,000 is invested in an account earning 3.1% interest compounded continuously, determine how long it will

Answer 1

Answer:

It will take about 35.439  years to triple.

Step-by-step explanation:

Recall the formula for continuously compounded interest:

$A=P\,e^{r*t}$

where "A" is the total (accrued or future) accumulated value, "r" is the rate (in our case 0.031 which is the decimal form of 3.1%), "P" is the principal, and "t" is the time in years (our unknown).

Notice also that even that the final amount we want to get is three times $48,000. So our formula becomes:

$3\,*\,48,000=\,48,000\,\,e^{0.031\,*t}\\\frac{3\,*\,48,000}{48,000} =e^{0.031*t}\\3=e^{0.031*t}$

Now,in order to solve for "t" (which is in the exponent, we use logarithms:

$ln(3)=0.031\,*\,t\\t=\frac{ln(3)}{0.031} \\t=35.439 \,\,years$