Question

How long will it take to double your savings at 10 percent annual rate, compounded semi-annually?

		14.21 years
		9.01 years
		7.10 years
		12.90 years

Answer 1

Assume that you have $100 today wee need to calculate in how many years
it will become $200 if you have invested it at 10% compounded semi-annually.
We can calculate this by using future value formula.
FV= PV*(1+r)^n
Where,
FV= Future Value =$200
PV = Present Value =$100
r = Interest rate =10%/2 =5%
n= periods in number
$200= $100*( 1+0.1)^n
2 =1.01^n
n =14.20
Number of sixonths = 14.20
Therefore number of years = 14.20/2 = 7.10 years
Correct Answer = 7.10 years