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Review for Final

  1. Jan 12, 2005 #1
    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 [tex] Pe^ r^t[/tex]? And then just substitute values (say P = 0)?


    Any help is appreciated

    Thanks
     
  2. jcsd
  3. Jan 12, 2005 #2
    I dont know whether I can use the above formula.
     
  4. Jan 12, 2005 #3

    dextercioby

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

    Daniel.
     
  5. Jan 12, 2005 #4
    So

    [tex] Pe^r^t = Pe^0.071^t [/tex]

    [tex] Pe^r^t = 4Pe^0^.^0^7^1^t [/tex]

    Is this right so far?

    Thanks
     
  6. Jan 12, 2005 #5

    dextercioby

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    Shouldn't it be something like:

    [tex] P(t)=P_{0}e^{0.071t}=4P_{0} [/tex]

    Daniel.
     
  7. Jan 12, 2005 #6
    yes you are right. Then how would you solve for t? Would you initially set [tex] P_0 [/tex] to any number?
     
  8. Jan 12, 2005 #7

    Curious3141

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    The [itex]P_0[/itex] cancels out and you're left with a simple exponential equation.
     
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