Business
ghara
2020-04-24 17:40:30
A sum of money is invested at 12% compounded quarterly. About how long will it take for the amount of money to double? Compound interest formula: V(T)=P(1+r/n)^nt t = years since initial deposit n = number of times compounded per year r = annual interest rate (as a decimal) P = initial (principal) investment V(t) = value of investment after t years p.S: Please explain, I have a couple problems like this so having an example to go off of would be nice. :) x Thanks
ANSWERS
eshuma
2020-04-24 23:17:00

If you want the money to double: V ( t ) = 2 P n = 4 ( because it is compounded quarterly ) r = 0.12 ( annual interest rate ) 2 P = P * ( 1 + 0.12/4 ) ^(4t)  / : P ( we divide both side of equation by P ) 2 = ( 1 + 0.03 )^(4t) 2 = ( 1.03 )^(4t) and because (1.03)^24 ≈ 2 ( using calculator ) 4 t = 24 t = 24 : 4 t = 6 Answer:  It will take 6 years.

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