Question

If you deposit money today in an account that pays 5.5% annual interest, how long will it take to double your money? Round your answer to two decimal places.

Answer 1

Let the present value be $1

Future value be $1 * 2 = $2

Future value = Present value ( 1 + r)ⁿ

2 = 1 ( 1 + 0.055)ⁿ

2 = (1.055)ⁿ

LN 2 = n LN 1.055

0.693147 = n 0.053541

n = 12.95

It will take 12.95 years.

Keys to use in a financial calculator:

PV -1

FV 2

I/Y 5.5

CPT N