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Math Help - mathematics in finance

  1. #1
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    mathematics in finance

    The question in my book is so vague I don't understand it ??? I don't even know what formula to us for this is have a list of formulas too.

    How long will it take money to double if it is invested at 7.5% compounded daily? 7.5% compounded annually?
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  2. #2
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    Re: mathematics in finance

    Quote Originally Posted by ossie4 View Post
    The question in my book is so vague I don't understand it ??? I don't even know what formula to us for this is have a list of formulas too.

    How long will it take money to double if it is invested at 7.5% compounded daily? 7.5% compounded annually?
    1. The amount of money at the time t is:

    A(t)=A(0) \cdot \left(1+\frac p{100} \right)^t

    2. Let A(0) = 1 $. Then A(t) = 2 $

    If the invested money is compounded daily then the percentage will be \frac{0.075}{365}. Thus you have to solve for t:

    2 = 1 \cdot \left(1+\frac{0.075}{365} \right)^t

    I've got t \approx 3374 d = 9 a 88 d

    3. If the invested money is compounded annually then the percentage will be 0.075. Thus you have to solve for t:

    2 = 1 \cdot \left(1+0.075 \right)^t

    I've got 9.584 a \approx 9 a 213 d

    4. Now you have to write a comment!
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