Question

You are currently investing your money in a bank account that has a nominal annual rate of 3.5 percent, compounded monthly. How many years will it take for you to double your money? Please keep two decimal places and make sure you round up/down correctly to two decimal places.

Answer 1

You need to use a Financial calculator to solve this problem. You can download it.

PV = -100 (Considering the present value of your investment to be $100)

FV = 200 (As the investment will be doubled, so the future value of the Investment will be $200)

I/Y = 3.5 / 12 = 0.2916 (3.5% is the yearly rate, so monthly rate will be divided by 12)

CPT + N = 238.05

So it will require 238.05 payments to reach double.

Number of years => 238.05 / 12 = 19.8375

So it will take 19.8375 years for an amount to double at a 3.5% rate compounded monthly.

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