Question

You invest $1000 into an account for a period of time. Assuming interest is compounded quarterly at an annual interest rate of 10%, exactly how much time will it take to at least double your money?

Answer 1

2.5 years. Since the interest compounded is quarterly and an annual interest rate of 10% (That's $100 dollars per interest compounded), this means that after a year you will have gained $400 dollars in interest. Thus in order to double you money ($2,000) it will take 2 and a half years.

Explanation:

Double your money: 2 x $1,000 = $2,000 (This will be the final total)

10% of 1000 is 100.

Quarterly = 4

4 x $100 = $400 back in interest per year.

2.5 x $400 = $1,000

or

$1,000/$400 = 2.5 (years)

$1,000 (from the initial deposit) + $1,000 (from interest) = $2,000