Question

How long will it take for an investment to triple in value if it earns 81% compounded continuously? Round your answer to three decimals.

A. 0.678 years
B. 0.856 years
C. 1.356 years
D. 1.366 years

Answer 1

The number of years it would take an investment to triple with continuous compounding is 1.356 years.

The formula for calculating future value of an investment when there is continuous compounding is FV = A x $e^{r}$ x N

Where:

• A= amount
• e = 2.7182818
• N = number of years
• r = interest rate
• FV = future value
• FV / A = 3

N = log(3) / log(e) / 0.81 = 1.356 years

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