Thursday, November 28, 2013

How long will it take $2900 being invested at 7% compounded quarterly to double? Use A=P(1+r/n)^nt.

Doubling time does not depend upon amount invested because A=2P and so P divides out of the equation. There is a formula, but the computation is really not that bad:
2=%281%2B0.07%2F4%29%5E%284%2At%29
simplify, take any log of both sides, and...
t=9.99 years (about 10 years)

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