Question

How long would it take for money to triple in value if invested at:

a.9% compounded annually

b. 9% compounded monthly

b.12% compounded quarterly

c.12% compounded monthly

Answer 1

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Answer:

Future value = Present value x (1 + Periodic Rate)^Number of periods

a)

3 = 1*(1.09)^n

log3 = n log (1.09)

=> n = 12.75 years ~ 13 years

b)

3 = 1*(1+0.09/12)^n

3 = 1.0075^n

log 3 = n log (1.0075)

=> n = 147.03 periods/months

c)

3 = 1*(1+0.12/3)^n

=> log3 = n log (1.04)

n = 28.011 ~ 28 quarters

d)

3 = 1*(1.12)^n

log3 = n log (1.12)

n = 9.694 years