6. At an interest rate of 6% annually, how long will it take for a sum to double? What if quarterly compounding or monthly compounding is applied?
Present value = Future value/(1+i)^n
i = interest rate per period
n= number of periods
=>
n = ln(future value/present value)/ln(1+i)
=>
a)
n = ln(2)/ln(1.06)
= 11.90 years
b)
n = ln(2)/ln(1+0.06/4)
= 46.56 quarters
= 11.64 years
c)
n = ln(2)/ln(1+0.06/12)
= 138.98 months
= 11.58 years
6. At an interest rate of 6% annually, how long will it take for a sum to double? What if quarterly compounding or month...
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