Question

How long, to the nearest year, will it take an investment to triple if it is continuously compounded at 18% per year?

I used A=Pe^rt to get the wrong answer 20 years. Don't understand what is wrong
Thanks

Answer 1

3P = Pe^.18t
3 = e^.18t
ln3 = .18t
1.0986 = .18t
t = 6.10

This makes sense, considering the rule of 72, which states that at r%, the amount doubles about every 72/r years.
So, we expect this to double every 4 years.