finance problem + logarithm 2

Mathematics
Tutor: None Selected Time limit: 1 Day

Use logarithms to solve the problem.

How long will it take an investment of $7,000 to double if the investment earns interest at the rate of 8% compounded continuously?

Dec 9th, 2014

Final Amount = Initial Amount x (1 + r)^t  where r is the annual interest rate and t is the time in years.

Call the initial amount X,   therefore the final amount will be 2X

Then, 2X = X(1+.08)^t

2 = (1.08)^t   Now take the log of both sides

log(2) = log(1.08)^t = t log(1.08)

t = log(2) / log(1.08) = 9 years

Dec 9th, 2014

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Dec 9th, 2014
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Dec 9th, 2014
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