Question

How long will it take for a lump-sum investment to double in value at an interest rate of 1.5% per month, compounded continuously

Answer 1

Answer:

It will take 47 months ( 3 years and 11 months)

Step-by-step explanation:

We use the compound interest formula here.

Mathematically;

A = P( 1 + r)^t

Where A is the amount which is 2 times the principal here, so we can call it 2P

P is the lump-sum invested

r is the monthly interest rate given as 1.5% = 1.5/100 = 0.015

t = time , which we want to calculate

Substituting these values, we have;

2P = P(1 + 0.015)^t

divide both sides by P

2 = 1.015^t

Take the log of both sides;

log 2 = log (1.015)^t

log 2 = t log 1.015

t = log2/log1.015

t = 46.55

which is approximately 47 months