To solve this problem you must apply the proccedure shown below:
1. You must apply the following formula:
[tex] FV=(PV)(e^{it}) [/tex]
Where [tex] FV [/tex] is the future value, [tex] PV [/tex] is the present value, [tex] i [/tex] is the interest rate and [tex] t [/tex] is the time in years.
2. You have that the bank will double your money in [tex] 20 [/tex] years. Therefore:
[tex] FV=2PV [/tex]
3. Substitute values into the formula and solve for [tex] i [/tex], as following:
[tex] 2PV=(PV)(e^{(i)(20)} \\ 2=e^{(i)(20)} [/tex]
4. By applying natural logarithm, you have:
[tex]ln(2)=(i)(20) \\ i= \frac{ln(2)}{20} \\ i=0.0346[/tex]
[tex]i=3.46[/tex] %
The answer is: [tex]3.46[/tex] %
