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A savings account earns 4.62% annual interest, compounded continuously. After approximately how many years will a principal of $500 double?

Respuesta :

mcba1234
Solve for "years" (t)

A=P e^(rt)

A=1000
P=500
e=e
r=0.0462

Solve for t: use natural logarithms

(0.0462)t=in 2

t=15 years

The principal amount of $500 doubles after approximately 16 years.

What is compound interest?

It is the interest that is computed based on both the principal deposited and the accumulated interest from past years.

Let the principal amount be x. The formula for finding compound interest amount is given below:

A = P(1 + r)^t

We have r = 0.0462. Substitute this and x in the equation:

2x = x(1 + 0.0462)^t

⇒ 2 = (1.0462)^t

⇒ (1.0462)^16 = (1.0462)^t

⇒ t = 16

Therefore we have found that the principal amount of $500 doubles after approximately 16 years.

Learn more about compound interest here: https://brainly.com/question/24274034

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