Question

Suppose that $2000 is invested in an account that pays interest compounded continuously. Find the amount of time that it would take for the account to grow to $4000 at 5.25%

Answer 1

Answer:

It will take 13.2 years to reach $4,000.  

Explanation:

Giving the following information:

PV= $2,000

FV= $4,000

i= 0.0525

To calculate the time required to reach the objective, we need to use the following formula:

n= ln(FV/PV) / i

n= ln(4,000/2,000) / 0.0525

n= 13.2

It will take 13.2 years to reach $4,000.