How long will it take $30,000 to quadruple if it is invested in a savings account that pays 3.5% annual interest compounded continuously? Round to the nearest year.
A)40 years
B)42 years
C)39 years
D)38 years
E)37 years

Question

Quizplus · Accepted Answer

The formula for continuous compounding is A = Pe^(rt), where A is the final amount, P is the principal, e is the base of the natural logarithm, r is the annual interest rate, and t is the time in years.We want to find t when A = 4P and P = $30,000 and r = 3.5%.4P = 30,000e^(0.035t)e^(0.035t) = 4/30.035t = ln(4/3)t = ln(4/3)/0.035t ≈ 40 yearsSo, the correct choice is A.

How Long Will It Take $30,000 to Quadruple If It