Math Problem Statement
Solution
It looks like the question involves determining the time required for an investment to double at an interest rate of 8.5%, compounded in different ways (annually, monthly, daily, and continuously). The correct answer for continuous compounding is already provided as 8.15 years, but the other values for daily, monthly, and annual compounding appear to be incorrect.
To solve these, we can use the following formulas:
-
Continuous Compounding:
The formula is , where is the final amount, is the principal, is the annual interest rate, and is the time in years. Since the money doubles, , so: Taking the natural logarithm on both sides: Solving for : -
Compounding times per year (for annually, monthly, daily compounding):
The formula is , where is the number of times the interest is compounded per year. Again, , so: Taking the natural logarithm on both sides and solving for , we get: We need to apply this for (annually), (monthly), and (daily).
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Math Problem Analysis
Mathematical Concepts
Exponential Growth
Compound Interest
Formulas
Continuous Compounding: A = P e^(rt)
Compounded n times per year: A = P (1 + r/n)^(nt)
Theorems
Natural Logarithm
Compounding Interest Theorem
Suitable Grade Level
Grade 11-12 (Advanced High School or College Level)
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