homework help please i can't get this one?

Question

Estimate the length of time that it would take to double your money at 15.86% with interest compounded annually. Show all work.

it doesn't say theirs any amount of money that's why i can't get it? should i tell my teacher that it's impossible?

Answer 1

It takes 5 years, but I don't know the algebraic formula for it. It works with any starting dollar amount. I used $100, and I multiplied by 1.1586 to get the amount with interest (this is an approximate method that will work for your purposes, since you are completely stuck):

100 (1.1586) = 115.86 ------- end of 1st year
115.86 (1.1586) = 134.24 --- end of 2nd year
134.24 (1.1586) = 155.53 --- end of 3rd year
155.53 (1.1586) = 180.20 --- end of 4th year
180.20 (1.1586) = 208.78 --- end of 5th year

Since interest is computed annually, at the end of the 5th year you would have doubled your money.


Well, if I had known she was going to edit her answer, I wouldn't have bothered!!!

Answer 2

It doesn't matter how much money you'd invest, because the interest rate is what matters... like the other person said, you could use the rule of 72. If you aren't supposed to know that yet, try this:

In this case, if you're trying to get 100 to become 200

$100.00 * 1.1586 = $115.86
$115.86 * 1.1586 = $134.24
$134.24 * 1.1586 = $155.53
$155.53 * 1.1586 = $180.19
$180.19 * 1.1586 = $208.77

Somewhere between years 4 and 5, so round up to 5 years (since this is simple interest, there is no such thing as a portion of a year).

You could do this with any starting number because the rate is constant.

For example, using $1...

$1.00 * 1.1586 = $1.16
$1.16 * 1.1586 = $1.34
$1.34 * 1.1586 = $1.56
$1.56 * 1.1586 = $1.80
$1.80 * 1.1586 = $2.09

Answer 3

Using "The Rule of 72's" your money doubles in the number of years equal to 72 divided by the rate of interest earned.

So 72/15.86=4.54 years.

Answer 4

well you would want to know how much money you are starting with otherwise you cant make any money off of interest.