Question

You want to invest an amount of money today and receive back twice that amount in the future. You expect to earn 6 percent interest. Approximately how long must you wait for your investment to double in value?

a) 8 years

b) 9 years

c) 10 years

d) 6 years

e) 12 years

Answer 1

Answer:

It will take 12 years to double the amount

So option (e) is correct answer

Explanation:

We have rate of interest r = 6 %

Let the principal amount is P

Then amount which we get A = 2P

We have to find the time period n

We know that amount is given by $A=P(1+\frac{r}{100})^n$

So $2P=P(1+\frac{6}{100})^n$

$1.06^n=2$

Taking log both side

$nlog1.06=log2$

$n\times 0.0253=0.3010$

n = 11.91 = 12 years