Question

If $22,000 is invested in an account earning 4.5% interest compounded continuously,

determine how long it will take the money to quadruple. Round to the nearest year.
Use the model A = Pet where A represents the future value of P dollars invested at
an interest rate r compounded continuously for t years.
OA) 31 years
B) 36 years
OC) 3 years
D) 308 years

Answer 1

31 years

Explanation:

A = P(interest rate)^number of years (n)

if the money is to quadruple, A = 4 X 22,000 = 88,000.

P = investment amount = 22,000.

interest rate is 4.5%. so we have the whole (100%) + 4.5% = 1.045%.

n is number of years.

22,000 (1.045)^n = 88, 000

divide both sides by 22, 000:

(1.045)^n = 4

take logs for both sides:

log (1.045)^n = log 4

simplify using log laws (by bringing down the n):

n log (1.045) = log 4

divide both sides by log (1.045):

n = (log 4) / log (1.045)

= 31.49 (31 years to nearest year)