Question

At 5 percent interest, how long does it take to double your money? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Length of time             years

At 5 percent interest, how long does it take to quadruple your money? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Length of time             years

Answer 1

a.We use the formula:
A=P(1+r/100)^n
where
A=future value($2x)
P=present value($x say)
r=rate of interest
n=time period.

2x=x*(1.05)^n

2=(1.05)^n

Taking log on both sides;

log 2=n*log 1.05

n=log 2/log 1.05

which is equal to

=14.21 years(Approx).

b.We use the formula:

A=P(1+r/100)^n
where
A=future value($4x)
P=present value($x say)
r=rate of interest
n=time period.

4x=x*(1.05)^n

4=(1.05)^n

Taking log on both sides;

log 4=n*log 1.05

n=log 4/log 1.05

which is equal to

=28.41 years(Approx).