Question

How many years will it take an investment to double at 6.4% compounded monthly? (Round to the nearest tenth))

Answer 1

Number of Years to Double= 10.62 years

Explanation:

First, we need to calculate the real annual interest rate:

Real annual interest rate= {[(i/12)+1]^12} - 1

Real annual interest rate= [{(0.064/12) + 1]^12 - 1}

Real annual interest rate= 0.0659

Now, we need to use the rule of 72. The rule of 72 is a means of estimating the number of years it takes for an investment or your money to double.

Number of Years to Double= 70/Annual Rate of Return

Number of Years to Double= 70/6.59

Number of Years to Double= 10.62 years