Question

What monthly compounding nominal interest rate is earned on an investment that doubles in 12 years

Answer 1

Answer:r=5.78 %

Explanation:

Given

time t=12 years

Investment doubles in 12 years when compounded monthly with r rate of interest

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

where A=amount

P=principal

r=rate of interest

n=no of times interest is compounded per unit time t

t=times

here A=2P

thus
`2=\left ( 1+(r)/(12)\right )^(12* 12)`

`2^(0.006944)=1+(r)/(12)`

`1.004824=1+(r)/(12)`

r=0.05789

r=5.789 %