Asked by Janice
what is the interest rate necessary for an investment to quadruple after 5 years of continuous compound interest?
I keep getting r=11%
I keep getting r=11%
Answers
Answered by
Steve
with interest rate r, continuous compounding for t years results in a growth factor of e^rt. So, you want
e^5r = 4
r = ln4/5 = .277, or 27.7%
Which formula were you using to get 11% ?
e^5r = 4
r = ln4/5 = .277, or 27.7%
Which formula were you using to get 11% ?
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