Question

Question 16:

You have saved $20,000 in an account for future goals. If you can earn 4.0% per year in the account, how many years (rounded to the nearest year) will it take you to double your money?

Answer 1

You can calculate number of years by this formula -
Initial amount * (1+ r) ^ x	=	Amount required
where,
r = rate of interest
x = number of years it would take
Therefore.
20000*(1.04)^x	=	40000
Now taking 20000 to other side
1.04^x	=	2
Applying log on both sides
x*log(1.04)	=	log(2)
Therefore.
x	=	log(2)/log(1.04)
Therefore.
x	=	17.67
i.e. approx 18 years