What interest rate is required for an investment with continuously compounded interest to double in 8 years?

1 Answer
Shwetank Mauria
Oct 31, 2016

At 8.66%

Explanation:

An investment of x with continuously compounded interest at r (r expressed as fraction not in percentage term) is xe^(rt) in t years.

As it doubles in 8 years, we have xe^(8r)=2x

or e^(8r)=2

or 8r=ln2=0.69315

or r=0.69315/8=0.0866=8.66%

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