How to Calculate Time Required for Investment to Quadruple at 7.1% Interest

[courtrigrad]

Hello all

Just had a question about interest:

Determine how much time is required for an investmnent to quadruple if interest is earned at a rate of 7.1% compunded continuously.

Would I just use the formula $$Pe^ r^t$$? And then just substitute values (say P = 0)?


Any help is appreciated

Thanks

 

[courtrigrad]

I don't know whether I can use the above formula.

 

[dextercioby]

My first guess is "yes"...The key words are "compounded continuously"...

Daniel.

 

[courtrigrad]

So

$$Pe^r^t = Pe^0.071^t$$

$$Pe^r^t = 4Pe^0^.^0^7^1^t$$

Is this right so far?

Thanks

 

[dextercioby]

Shouldn't it be something like:

$$P(t)=P_{0}e^{0.071t}=4P_{0}$$

Daniel.

 

[courtrigrad]

yes you are right. Then how would you solve for t? Would you initially set $$P_0$$ to any number?

 

[Curious3141]

yes you are right. Then how would you solve for t? Would you initially set $$P_0$$ to any number?

The $P_0$ cancels out and you're left with a simple exponential equation.