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Nov
10
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Wanna Know asked:
How long will it take an investment to double at 7% interest compounded continuously?? I also need the same question but triple instead of double. I’m just not getting how to solve for that. Thanks!
LEN
How long will it take an investment to double at 7% interest compounded continuously?? I also need the same question but triple instead of double. I’m just not getting how to solve for that. Thanks!
LEN
Comments
Dave A on 13 November, 2009 at 12:17 am #
About 10 years. The approximate daily interest rate is r = 0.07/365.25. If n is the number of days of compounded interest, then you want (1 + r)^n = 2. Take logs to get n log(1 + r) = log 2, which implies n = log 2 / log (1 + r). Plug in the value of r above and you get n = 3617 days, which is 3617/365.25 = 9.9 years.
An approximate answer would be to use the rule of 72. Just divide the interest rate (7%) into 72 and you get about 10. It works pretty well as an approximation.
Mr. Smith on 13 November, 2009 at 10:50 am #
2=e^(.07t)
ln(2)=.07t
ln(2)/.07=t
t=9.9 years
so that is about 10 years
For Tripple
3=e^(.07t)
ln(3)=.07t
ln(3)/.07=t
t=15.7 years
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