Respuesta :
The investment values are:
a) The number of times it'll take the investment to double is roughly=23.10 years
b) The original periodic interest rate is roughly=0.03
The continuous compounding intrest rate is
The reason the below values are correct is given as follows
a) The given parameters are:
Chance interest rate, r = 3
The nonstop compounding interest rate formula, is given as follows:
[tex]P(t)=P_{0} .e^{r.t} \\[/tex]
When the investment doubles, we have:
[tex]P_{0}= P_{0} .e^{r.t} \\e^{0.03*t} =2\\ t=\frac{In2}{0.03} =23.10[/tex]
The number of times, t, it'll take the investment to double is t ≈23.10 times
b) The original periodic interest rate is given as follows:
[tex]i_{eff} =e^{r} -1[/tex]
Where:
[tex]i_{eff}[/tex] = Effective periodic interest rate = Original periodic interest rate
Thus, we have:
[tex]i_{eff} =e^{0}.03 -1=0.03[/tex]
The original periodic interest rate ≈0.03
Learn Further about nonstop compounding interest rate then:
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