Question

You are saving up to buy a house. You want to have $100,000 as a down payment. You invest $20,000 into a savings account that pays 25% interest compounded continuously. How long will it take until you can buy a house?

Answer 1

About 6.44 years

Explanation:

`A=Pe^(rt)\\100000=20000e^(0.25t)\\5=e^(0.25t)\\\ln5=0.25t\\t=(\ln5)/(0.25)\\t\approx6.44`

Therefore, it will take about 6.44 years (assuming that's the unit of time) until you can make the down payment.