Question

Adam deposited $1500 in an account in which interest is compounded continuously. The annual rate of interest is 2.5 %. How long does it take for his money to double?

Answer 1

The time needed to double the deposited amount of $1500 to $3000 is calculated with the following equation

FV= P*e^rt

Where, FV is the future value of the investment

P is the initial principal amount

r rate of interest

t is time period

3000 = 1500*e^0.025t

e^0.025t = 3000/1500

lne^0.025t = ln2 (taking natural natural log on both sides)

Since lnex =x

0.025t = ln2

t =ln2/0.025

t = 0.693147/0.025

t = 27.73

Therefore, it will take 27.73 years for the investment to double.