How long will it take (in years and months),
for $400 to double in value, if it earns interest
at 3.13% compounded semi-annually.
Round N to the next higher value (e.g. N = 123.2 becomes N = 124),
and round the month to the next higher month (e.g. 7.1 becomes 8).
Years must be an integer. If years is an
exact integer such as 17 years 0
months, a zero must be entered for
months.
I/Y = | % | P/Y = C/Y = |
PV = | $ | PMT = | $ | FV = | $ |
N= Time=
FV = PV [(1+i)^t] | ||||||||
Where, | ||||||||
FV = Future value | ||||||||
PV = Present Value | ||||||||
i= Interest rate per period | ||||||||
t = Number of periods | ||||||||
As the interest is compounded semi-annually, the interest rate is converted to semi-annual rate | ||||||||
Interest rate semi-annually = 3.13%*6/12 | ||||||||
= 1.565% | ||||||||
Therefore, | ||||||||
$800 = $400 [1.01565^t) | ||||||||
1.01565^t = 2 | ||||||||
t, number of periods = 44.64 | ||||||||
Therefore, | ||||||||
number of years = 44.64*6/12 | ||||||||
= 22.32 years | ||||||||
= 22 years and 4 months |
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