Question

Use the approximate doubling time formula for the case described below. Discuss whether the formula is valid for the case described.Gasoline prices are rising at a rate of 0.6% per month. What is their doubling time?

Answer 1

ANSWER:

EXPLANATION:

Given the rising rate of 0.6% per month, we can go ahead and determine the doubling time as seen below;

$\begin{gathered} P=P_0(1+r)^t \\ \\ \frac{P}{P_0}=(1+0.006)^t \\ \\ 2=1.006^t \\ \\ \ln2=t\ln1.006 \\ \\ t=\frac{\ln2}{\ln1.006} \\ \\ t=115.87\text{ months} \end{gathered}$