Final answer:
To calculate how many years it takes for an investment to double at a 10% annual interest rate compounded monthly, use the Excel NPER function with the formula =NPER(0.10/12, 0, -15000, 30000) and then divide the result by 12 to convert months to years.
Step-by-step explanation:
To calculate how many years it will take for a $15,000 investment to grow to $30,000 at an annual rate of 10% compounded monthly in Excel, we'll use the NPER function, which stands for Number of Periods.
To determine the number of years, the formula in Excel would be:
=NPER(rate/nper, pmt, pv, [fv], [type])
Where:
- rate is the annual interest rate (10% or 0.10 in this example)
- nper represents the number of compounding periods per year (12 for monthly)
- pmt is the payment made each period; in this case, it's 0 because we're not making regular payments
- pv is the present value of the investment (-$15,000 since it's an outflow)
- fv is the future value of the investment ($30,000)
- type indicates when the payments are due. Use 0 for end of the period (which we'll use since there's no regular payment)
Plug in the values:
=NPER(0.10/12, 0, -15000, 30000)
This formula yields the total number of months required to reach the goal. To convert to years, divide the result by 12.