Question

ABC Bank pays 5.16% interest on a CD account. How long it will take you to triple your money?

Answer 1

Solution:

Rate of Interest = 5.16%

We have calculate that how many years need to triple our money.

Assume that we deposit $1 into bank account = this is the Present Value

and we need $3 in future so $3 is the Future value.

Firstly we will calculate Present Value Factor :

PV Factor = Present Value / Future Value

= 1 / 3

= 0.33

If we Calculate Present Value Factor @ 5.16% for 22nd year than it will be :

Present Value Factor @5.16 % for 22nd Year = 1 / (1+r) n

= 1 / (1+ 0.0516) 22

= 1 / (1.0516) 22

=1/ 3.0249117

= 0.3305

or say 0.33

So it will take 22 years to triple our money.