Question

If you put $2,000 into an interest bearing account, where interest is compounded quarterly (4 times a year) at 6%, how long will it take for your money to triple?

Answer 1

`18.4\ years`

Explanation:

we know that

The compound interest formula is equal to

`A=P(1+(r)/(n))^(nt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

in this problem we have

`t=?\ years\\ P=\$2,000\\ r=0.06\\n=4\\A=\$6,000`

substitute in the formula above

`\$6,000=\$2,000(1+(0.06)/(4))^(4t)`

`3=(1.015)^(4t)`

Applying log both sides

`log(3)=4tlog(1.015)`

`t=log(3)/[4log(1.015)]`

`t=18.4\ years`