In before part, you were asked how long it would take for a particular investment to double in vestment to double in value. This question is answered in the following example.
If 1000$ is investted at 8% annual interest, compounded continuously, how long will it take for the investment to double? Would the doubling time change if the principal were something other than1000$.
Solution:
With a principal of 1000$, the balance after t years is B(t) = 1000e0.08t , so the investment doubles when B(t)= 2000$; that is, when
2000 = 1000e0.08t
Dividing by 1000 and taking the natural logrithm on each side of the equation, we get
2 = e0.08t
If the principal had been P0 dollars instead of 1000$, the doubling time would satisty
which is exactly the same equation we had with P0 = 1000$, so once again, the double time is 8.66 years.
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