This is a question I *might* have already got the answer to, I'd just like for someone very good with calculus and algebra to verify/answer the question themselves.(adsbygoogle = window.adsbygoogle || []).push({});

To be more exact with the problem, we are putting 1 dollar (a variable principle) into a continuously compounded interest account at rate r. At what moment does one year's interest (e^r-1), equal our principle of 1 dollar per year. Or at what time can we stop putting the dollar in completely.

I solved it as the most complicated substitution problem I, personally, have ever done. Feel free to do it any way you please, I'm looking for both answers and/or possible mistakes in my math.

Let F = Final, P = principle, r = interest rate, y = years.

Given that:

F = Pe^(ry)

And

P1 = ($)1 x y

(P1 because I'm going to have to use another P later)

Then replacing 1y for P we get

F = ye^(ry)

This gives us F for any time y, and rate r.

But we want a specific F, to get that I first defined what P2 is required for the next year's interest to be equal to the 1 dollar we are putting in every year.

P2(e^r-1) = 1

P2=1/(e^r-1)

In order to substitute this in we must substitute P2 into a separate F = Pe^(rt2)

We know that t2 = 1 because in the question we asked when does (e^r-1) of the *last* year equal $1.

We get

F = e^r/(e^r-1)

Then substitute this final into our F = ye^ry

we get

e^r/(e^r-1) = ye^ry

0 = ye^ry - e^r/(e^r-1)

at 15% interest I get y = 3.96 years. Graphing on my calculator because as far as I know that is unsolvable algebraically

at 8% interest I get y = 7.27 years.

Sounds too good to be true. Put $20k in a savings account for 4-7 years and you will raise your wage $20k/year for the rest of your life? Start investing! It will be free soon. lol.

This is only my most recent approach to this problem. Other answers which I have debunked are (for 8% interest) 13.8 years, 20 years, and 7.5 years. I'd like confirmation, or a correct answer please.

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# When does return on interest, equal your annual principle savings

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