Question

How long does it take to double your money at 10 percent interest? How long does it take to quadruple your money?

Present Value	Years	Interest Rate	Future Value
$ 1.00		10%	$2.00
$1.00		10%	$4.00

Answer 1

a.We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

2=1*(1.1)^n

2=(1.1)^n

Taking log on both sides;

log 2=n*log (1.1)

n=log2/log (1.1)

=7.27 years(Approx).

b.We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

4=1*(1.1)^n

4=(1.1)^n

Taking log on both sides;

log 4=n*log (1.1)

n=log 4/log (1.1)

=14.55years(Approx).

Present value	Years	Interest Rate	Future value
$1	7.27 years(Approx).	10%	$2
$1	14.55years(Approx).	10%	$4