Question

Problem 5-7 Calculating the Number of Periods (L04) At 6.7 percent interest, how long does it take to double your money? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g. 32.16.) Length of time years At 6.7 percent interest, how long does it take to quadruple it? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g. 32.16.) Length of time years

Answer 1

1.

Assume that the amount to be invested is $100. Then, we need to determine the number of years it will take to double this amount that is make it $200 at an interest rate of 6.7%.

In the given situation, the present value is $100 and the future value is $200.

The calculations will be done as follows:

	A	B
1	Rate	6.70%
2	PMT	0
3	PV	100
4	FV	200
5	Type	0
6
7	NPER	10.69

Therefore, length of time is 10.69 years.

Calculation is done in excel using the "NPER" formula in the following manner:

	A	B
1	Rate	0.067
2	PMT	0
3	PV	100
4	FV	200
5	Type	0
6
7	NPER	=NPER(B1,B2,-B3,B4,B5)

2.

Assume that the amount to be invested is $100. Then, we need to determine the number of years it will take to quadruple this amount that is make it $400 at an interest rate of 6.7%.

In the given situation, the present value is $100 and the future value is $400.

The calculations will be done as follows:

	A	B
1	Rate	6.70%
2	PMT	0
3	PV	100
4	FV	400
5	Type	0
6
7	NPER	21.38

Therefore, length of time is 21.38 years.

Calculation is done in excel using the "NPER" formula in the following manner:

	A	B
1	Rate	0.067
2	PMT	0
3	PV	100
4	FV	400
5	Type	0
6
7	NPER	=NPER(B1,B2,-B3,B4,B5)