Chapter 2.3, Problem 47E

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7th Edition

Stefan Waner + 1 other

ISBN: 9781337274203

Textbook Problem

**Long-Term Investments** Exercises 41-48 are based on the following table, which lists interest rates on long-term investments (based on 10-year government bonds) in several countries in 2014.^{37} **[HINT:** See Example 2.**]**

Country |
U.S. | Japan | Germany | Australia | Brazil |

Yield |
2.5% | 0.5% | 1.0% | 3.5% | 4.2% |

If the interest on a long-term U.S. investment is compounded continuously, how long will it take the value of an investment to double? (Give the answer correct to two decimal places.)

To determine

**To calculate:** The time required for an investment to be double its value in U.S. if the interest is compounded continuously.

Explanation

**Given Information:**

The returned amount is double of its investment amount.

The interest is compounded continuously.

The interest rate table is,

Country | U.S. | Japan | Germany | Australia | Brazil |

Yield | 2.5% | 0.5% | 1.0% | 3.5% | 4.2% |

**Formula used:**

The relation between growth constant and doubling time if interest is compounded continuously is,

Here,

The relation between growth constant and rate of interest if interest is compounded continuously is,

Here

**Calculation:**

The rate of interest in U.S. is 2.5%.

Substitute

Sect-2.1 P-1ESect-2.1 P-2ESect-2.1 P-3ESect-2.1 P-4ESect-2.1 P-5ESect-2.1 P-6ESect-2.1 P-7ESect-2.1 P-8ESect-2.1 P-9ESect-2.1 P-10E

Sect-2.1 P-11ESect-2.1 P-12ESect-2.1 P-13ESect-2.1 P-14ESect-2.1 P-15ESect-2.1 P-16ESect-2.1 P-17ESect-2.1 P-18ESect-2.1 P-19ESect-2.1 P-20ESect-2.1 P-21ESect-2.1 P-22ESect-2.1 P-23ESect-2.1 P-24ESect-2.1 P-25ESect-2.1 P-26ESect-2.1 P-27ESect-2.1 P-28ESect-2.1 P-29ESect-2.1 P-30ESect-2.1 P-31ESect-2.1 P-32ESect-2.1 P-33ESect-2.1 P-34ESect-2.1 P-35ESect-2.1 P-36ESect-2.1 P-37ESect-2.1 P-38ESect-2.1 P-39ESect-2.1 P-40ESect-2.1 P-41ESect-2.1 P-42ESect-2.1 P-43ESect-2.1 P-44ESect-2.1 P-45ESect-2.1 P-46ESect-2.1 P-47ESect-2.1 P-48ESect-2.1 P-49ESect-2.1 P-50ESect-2.1 P-51ESect-2.1 P-52ESect-2.1 P-53ESect-2.1 P-54ESect-2.1 P-55ESect-2.1 P-56ESect-2.1 P-57ESect-2.1 P-58ESect-2.1 P-59ESect-2.1 P-60ESect-2.1 P-61ESect-2.1 P-62ESect-2.2 P-1ESect-2.2 P-2ESect-2.2 P-3ESect-2.2 P-4ESect-2.2 P-5ESect-2.2 P-6ESect-2.2 P-7ESect-2.2 P-8ESect-2.2 P-9ESect-2.2 P-10ESect-2.2 P-11ESect-2.2 P-12ESect-2.2 P-13ESect-2.2 P-14ESect-2.2 P-15ESect-2.2 P-16ESect-2.2 P-17ESect-2.2 P-18ESect-2.2 P-19ESect-2.2 P-20ESect-2.2 P-21ESect-2.2 P-22ESect-2.2 P-23ESect-2.2 P-24ESect-2.2 P-25ESect-2.2 P-26ESect-2.2 P-27ESect-2.2 P-28ESect-2.2 P-29ESect-2.2 P-30ESect-2.2 P-31ESect-2.2 P-32ESect-2.2 P-33ESect-2.2 P-34ESect-2.2 P-35ESect-2.2 P-36ESect-2.2 P-37ESect-2.2 P-38ESect-2.2 P-39ESect-2.2 P-40ESect-2.2 P-41ESect-2.2 P-42ESect-2.2 P-43ESect-2.2 P-44ESect-2.2 P-45ESect-2.2 P-46ESect-2.2 P-47ESect-2.2 P-48ESect-2.2 P-49ESect-2.2 P-50ESect-2.2 P-51ESect-2.2 P-52ESect-2.2 P-53ESect-2.2 P-54ESect-2.2 P-55ESect-2.2 P-56ESect-2.2 P-57ESect-2.2 P-58ESect-2.2 P-59ESect-2.2 P-60ESect-2.2 P-61ESect-2.2 P-62ESect-2.2 P-63ESect-2.2 P-64ESect-2.2 P-65ESect-2.2 P-66ESect-2.2 P-67ESect-2.2 P-68ESect-2.2 P-69ESect-2.2 P-70ESect-2.2 P-71ESect-2.2 P-72ESect-2.2 P-73ESect-2.2 P-74ESect-2.2 P-75ESect-2.2 P-76ESect-2.2 P-77ESect-2.2 P-78ESect-2.2 P-79ESect-2.2 P-80ESect-2.2 P-81ESect-2.2 P-82ESect-2.2 P-83ESect-2.2 P-84ESect-2.2 P-85ESect-2.2 P-86ESect-2.2 P-87ESect-2.2 P-88ESect-2.2 P-89ESect-2.2 P-90ESect-2.2 P-91ESect-2.2 P-92ESect-2.2 P-93ESect-2.2 P-94ESect-2.2 P-95ESect-2.2 P-96ESect-2.2 P-97ESect-2.2 P-98ESect-2.2 P-99ESect-2.2 P-100ESect-2.2 P-101ESect-2.2 P-102ESect-2.2 P-103ESect-2.2 P-104ESect-2.2 P-105ESect-2.2 P-106ESect-2.2 P-107ESect-2.2 P-108ESect-2.2 P-109ESect-2.2 P-110ESect-2.3 P-1ESect-2.3 P-2ESect-2.3 P-3ESect-2.3 P-4ESect-2.3 P-5ESect-2.3 P-6ESect-2.3 P-7ESect-2.3 P-8ESect-2.3 P-9ESect-2.3 P-10ESect-2.3 P-11ESect-2.3 P-12ESect-2.3 P-13ESect-2.3 P-14ESect-2.3 P-15ESect-2.3 P-16ESect-2.3 P-17ESect-2.3 P-18ESect-2.3 P-19ESect-2.3 P-20ESect-2.3 P-21ESect-2.3 P-22ESect-2.3 P-23ESect-2.3 P-24ESect-2.3 P-25ESect-2.3 P-26ESect-2.3 P-27ESect-2.3 P-28ESect-2.3 P-29ESect-2.3 P-30ESect-2.3 P-31ESect-2.3 P-32ESect-2.3 P-33ESect-2.3 P-34ESect-2.3 P-35ESect-2.3 P-36ESect-2.3 P-37ESect-2.3 P-38ESect-2.3 P-39ESect-2.3 P-40ESect-2.3 P-41ESect-2.3 P-42ESect-2.3 P-43ESect-2.3 P-44ESect-2.3 P-45ESect-2.3 P-46ESect-2.3 P-47ESect-2.3 P-48ESect-2.3 P-49ESect-2.3 P-50ESect-2.3 P-51ESect-2.3 P-52ESect-2.3 P-53ESect-2.3 P-54ESect-2.3 P-55ESect-2.3 P-56ESect-2.3 P-57ESect-2.3 P-58ESect-2.3 P-59ESect-2.3 P-60ESect-2.3 P-61ESect-2.3 P-62ESect-2.3 P-63ESect-2.3 P-64ESect-2.3 P-65ESect-2.3 P-66ESect-2.3 P-67ESect-2.3 P-68ESect-2.3 P-69ESect-2.3 P-70ESect-2.3 P-71ESect-2.3 P-72ESect-2.3 P-73ESect-2.3 P-74ESect-2.3 P-75ESect-2.3 P-76ESect-2.3 P-77ESect-2.4 P-1ESect-2.4 P-2ESect-2.4 P-3ESect-2.4 P-4ESect-2.4 P-5ESect-2.4 P-6ESect-2.4 P-7ESect-2.4 P-8ESect-2.4 P-9ESect-2.4 P-10ESect-2.4 P-11ESect-2.4 P-12ESect-2.4 P-13ESect-2.4 P-14ESect-2.4 P-15ESect-2.4 P-16ESect-2.4 P-17ESect-2.4 P-18ESect-2.4 P-19ESect-2.4 P-20ESect-2.4 P-21ESect-2.4 P-22ESect-2.4 P-23ESect-2.4 P-24ESect-2.4 P-25ESect-2.4 P-26ESect-2.4 P-27ESect-2.4 P-28ESect-2.4 P-29ESect-2.4 P-30ESect-2.4 P-31ESect-2.4 P-33ESect-2.4 P-34ESect-2.4 P-35ESect-2.4 P-36ESect-2.4 P-37ESect-2.4 P-38ESect-2.4 P-39ESect-2.4 P-40ESect-2.4 P-41ESect-2.4 P-42ESect-2.4 P-43ESect-2.4 P-44ECh-2 P-1RECh-2 P-2RECh-2 P-3RECh-2 P-4RECh-2 P-5RECh-2 P-6RECh-2 P-7RECh-2 P-8RECh-2 P-9RECh-2 P-10RECh-2 P-11RECh-2 P-12RECh-2 P-13RECh-2 P-14RECh-2 P-15RECh-2 P-16RECh-2 P-17RECh-2 P-18RECh-2 P-19RECh-2 P-20RECh-2 P-21RECh-2 P-22RECh-2 P-23RECh-2 P-24RECh-2 P-25RECh-2 P-26RECh-2 P-27RECh-2 P-28RECh-2 P-29RECh-2 P-30RECh-2 P-31RECh-2 P-32RECh-2 P-33RECh-2 P-35RECh-2 P-36RECh-2 P-37RECh-2 P-38RECh-2 P-39RECh-2 P-40RECh-2 P-41RECh-2 P-42RECh-2 P-43RECh-2 P-44RECh-2 P-45RECh-2 P-50RE

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