Question 652632: ABC bank is offering to double your money! They say that if you invest with them at 6% interest compounded quarterly they will double your money. If you invest $1500 in the account, how long will it take to double your money?
Answer by lwsshak3(11628)   (Show Source):
You can put this solution on YOUR website! ABC bank is offering to double your money! They say that if you invest with them at 6% interest compounded quarterly they will double your money. If you invest $1500 in the account, how long will it take to double your money?
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Compound Interest Formula: A=P(1+i)^n, P=initial investment, i=interest rate per period, n=number of periods, A=amt after n periods
For given problem:
i=.06/4=.015
P=1500
A=3000
A/P=(1+i)^n=2
(1+i)^n=2
(1+.015)^n=2
1.015^n=2
take log of both sides
nlog(1.015)=log2
n=log2/log(1.015
n≈47 periods or about 12 yrs
how long will it take to double your money? about 12 yrs
note: It wasn't necessary to know the initial investment.
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