Question

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

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.