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Thread: Exponential functions? NOO

  1. #1
    Goes Rawr!
    Join Date
    Nov 2003
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    349
    Damn what the hell. Why can't i solve this.

    Determine how much time is required for an investment to double in value if interest is earned at the rate of 6.25% compounded monthly.

    I'm using formula
    Code:
    a = ao^kt
    
    k being constant
    t being time
    ao being inital 
    a being total



  2. Lounge   -   #2
    enoughfakefiles's Avatar Ad ministrator
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    /moved to homeworkworld.

  3. Lounge   -   #3
    Barbarossa's Avatar mostly harmless
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    Code:
    FV = PV(1 + i/m)^mt
    
    FV - future value
    PV - present value
    i - rate of interest
    m - number of times per year interest is compounded
    t - number of years until maturity of the investment
    So in your case, you need to find t. But you know that FV = 2PV,

    so:

    2PV = PV(1+0.0625/12)^12t
    2=(1+0.0625/12)^12t
    12th-root-of-2 = 1.0052^t
    1.0594 = 1.0052^t

    So t = just under 11.14 years.

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