Question

How long will it take (in years and months), for $400 to double in value, if...

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=

Homework Answers

Answer #1
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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