If you deposit money today in an account that pays 6.5% annual interest, how long will it take to double your money
belongs to book: FUNDAMENTALS OF FINANCIAL MANAGEMENT|Eugene F.Brigham, Joel F. Houston|12th Edition| Chapter number:5| Question number:11
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deposit is compounded monthly.
need an explanation for this answer? contact us directly to get an explanation for this answerD = deposit
y = number of years deposited
t = number of times compounded annually
A = 6.5 %
r = A / t
ty = number of periods compounded
D ( 1 + r ) ty = 2D
(1 + r )ty = 2
ln ((1 + r )ty) = ln (2)
ty ln(1 + r ) = ln (2 )
ty = [ln(2)] / [ln (1 + r)]
ty = [ ln(2) ] / [ ln ( 1 +( 0.065/12) )]
ty = 128.31
It will take 128.31 months for you deposit to double if compounded monthly.
After 129 months you will more than double your deposit.