Doubling time of investment?

Question

$1400 at 6% compounded quarterly

A) 9.31 years
B) 11.64 years
C) 23.28 years
D) 17.46 years

Answer 1

The answer is B.

2A = A(1 + .06/4)^(4x)
2 = (1.015)^(4x)
ln 2 = ln[(1.015)^x] = 4x ln(1.015)

x = ln(2) / [4 ln(1.015)] ≈ 11.64 years

Answer 2

Hi
I thought it was the rule of 70 -
an investment compounding at x% per annum doubles after 70/x years.

Use this and compare with using compound interest formula.

Rule of 70
Years = 70/6 = 11.67 years = 11 years 8 months.

Compound Interest
2 = (1+i)^n
2 = (1+0.06/4) ^ n
n =log2 / log( 1+0.06/4)
n = 46.555 compoundng periods
n = 46.555 / 4 years
n=11.64 years = 11 years 8 months (to nearest month)

So the Rule of 70 is pretty good.
Try it.

Remember if you are compounding quarterly you really have to round up answer to next quarter.

Answer 3

12 years as computed by the rule of 72 is good, but that rule applies to simple interest, and does not take into consideration the effect of compounding. A) 9.3168 years (to be precise)

Answer 4

B - about 12 years, using the rule of 72. (A figure increasing at x% per annum doubles after 72/x years.)

Answer 5

No.....no... investment for me is guarantee to doubling in targeted time. Just because investment is risk. If you want double income, manage your own business. In 10 years your capital or investment will be double. Study the nature of investment.