How long will it take to earn $7000 on a $3500 investment at a rate of 7.8% compounding continuously?

Question

2565 views around the world

You can reuse this answer
Creative Commons License

Answer 1 · 2016-06-12T12:56:24

$n = 9.229$ years

As it does not state what the period of compounding refers to, I will assume it is per year.

For Compound Interest"
$Amount = P(1 + r)^n$ , where $n$ is the time in years.

$7000 = 3500(1 + 0.078)^n$

$2 = (1.078)^n " divide by 3500"$

Because $n$ is an exponent, we need to use logs.

$log2 = n log1.078" power law as well"$

$log2/log1.078$ = $n$

$n = 9.229 years " calculator"$