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The Natural Base e

The Natural Base e 1.13 - Solution

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We will follow three steps.

  1. Determining which formula to use.
  2. Identifying the values of the variables in the formula.
  3. Determining which variable we need to solve for.

Determining Formula

We have to use the formula below because the annual interest is compounded continuously. In this formula, is the amount in the account in time is the principal, is the annual interest rate.

Identifying the Values

We know that an account pays annual interest rate compounded continuously. We want to find the number of years necessary for our principal to double. Let say the principal is equal to After years, it will double itself, Therefore,

Determining the Variable to Solve

We need to find the number of years for our principal to double. Let's substitute the values into the formula.
To solve the equation by graphing, we first have to create two functions. Each side of the given equation will become its own equation. Now we want to draw these graphs using a calculator. We can do this by pressing the button and typing the equations in the two first rows. We replace the variable with the variable
Fönster med funktioner

Before we graph these functions, notice that the exponent of is so the function will grow very slowly. We may not be able to see the intersection of the lines in the standard viewing window. That's why, we should change the viewing window. We can do this by pushing

Fönster med funktioner
Fönster med funktioner

There is one point of intersection of these lines. To find this point we can use the intersect option, which we get by pushing and Now, we select both graphs and provide the calculator with a guess as to where the intersection might be.

Fönster med funktioner
Fönster med funktioner

The solution to the equation is It would take approximately years to double our principal.