Question

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

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

Input area: Output area:
Present value Years Interest rate Future value
$                    1.00 ***? 10% $             2.00
                       1.00 ***? 10%                 4.00

Homework Answers

Answer #1

FV = PV(1+r)n

FV= Future Value

PV = Present Value

R = Rate of Return

N = No of years

Case 1 : When amount gets doubled

FV = PV(1+r)n

FV= Future Value = 2

PV = Present Value = 1

R = Rate of Return = 10%

N = No of years = ?

FV = PV(1+r)n

2= 1(1+.10)n

2 = (1.1)n

n = 7 years (approx)

Case 2 : When amount gets quadruple

FV = PV(1+r)n

FV= Future Value = 4

PV = Present Value = 1

R = Rate of Return = 10%

N = No of years = ?

FV = PV(1+r)n

4= 1(1+.10)n

4 = (1.1)n

n = 14 years 9 months (approx)

The above values of n are identified using calculator.

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