Problem

How long will it take for an investment to triple, if interest is compounded continuously at $6 \%$ ?

Solution

Step 1 :We are given that the interest is compounded continuously at a rate of 6%. We want to find out how long it will take for an investment to triple.

Step 2 :We can use the formula for continuous compounding, which is \(A = Pe^{rt}\), where \(A\) is the final amount, \(P\) is the principal amount, \(r\) is the interest rate, and \(t\) is the time.

Step 3 :In this case, we want the final amount to be triple the principal amount, so we can set \(A = 3P\).

Step 4 :Let's set \(P = 1\), \(A = 3\), and \(r = 0.06\). We can then solve for \(t\).

Step 5 :Solving the equation gives us \(t = 18.310204811135165\).

Step 6 :Rounding to two decimal places, we get \(t = 18.31\).

Step 7 :Final Answer: It will take approximately \(\boxed{18.31}\) years for an investment to triple if interest is compounded continuously at 6%.

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Source: https://solvelyapp.com/problems/19744/

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