An initial investment of $4000 doubles in value in 6.8 years. Assuming continuous compounding, what was the interest rate?

Printable View

- Nov 22nd 2009, 12:32 PMVNVeteranInterest rate
An initial investment of $4000 doubles in value in 6.8 years. Assuming continuous compounding, what was the interest rate?

- Nov 22nd 2009, 12:40 PMpickslides
I would use the model

where A = annuities, P = principal amount invested, r = rate, t = time in years

Therefore

as the amount doubled over 6.8 years, using (t,A) = (6.8,8000) gives

Can you solve for r?

__Spoiler__: - Nov 22nd 2009, 12:52 PMVNVeteran