Question

How long will it take to double your money with a growth rate of 4.0 percent and 5.00 percent respectively? (Round your answers to 1 decimal place.)

Growth rate
4.0 percent	( )Years
5.00 percent	( )Years

Answer 1

1. The number of years is computed as shown below:

Future value = Present value x (1 + r)ⁿ

$ 2 = $ 1 x (1 + 0.04)ⁿ

2 = 1.04 ⁿ

Taking log both sides, we shall get:

log 2 = n log 1.04

0.693147181 = n x 0.039220713

n = 0.693147181 / 0.039220713

n = 17.7 years Approximately

2. The number of years is computed as shown below:

Future value = Present value x (1 + r)ⁿ

$ 2 = $ 1 x (1 + 0.05)ⁿ

2 = 1.05 ⁿ

Taking log both sides, we shall get:

log 2 = n log 1.05

0.693147181 = n x 0.048790164

n = 0.693147181 / 0.048790164

n = 14.2 years Approximately

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