financial management

RWASH49 · #1 Apr 29, 2008, 04:10 PM

if you deposit money today in a account that pays 6.5 percent annual interest, how long will it take to double your money?

DrJizzle · Apr 29, 2008, 04:20 PM

about 11 years and a few days by my calculations...

ebaines · Apr 30, 2008, 05:29 AM

A good way to estimate this is to use the "rule of 72." Divide 72 by the interest rate (in percent)) and you get the approximate number if years it takes your investment to double. Here 72/6.5 = 11.08 years.

The more precise way is to solve the following equation for n:

(1+i)^n = 2

You can solve this using logarithms, and you get DrJ's answer.



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