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What is the number of years it will take the investment to double? if Moe invests $ 7,500 in an account that pays 2.4% interest compounded monthly. Round your final answer to two decimal places.

User Kkjoe
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1 Answer

5 votes

Answer:

28.91 years

Explanation:

The investment value is multiplied each year by the factor ...

(1 +r/12)^12

= (1 +0.024/12)^12 = 1.002^12 ≈ 1.024265768

When the investment is multiplied by this factor for x years, the multiplication factor becomes 1.024265768^x. We want to know the value of x that makes this equal to 2:

2 = 1.024265768^x

log(2) = x·log(1.024265768) . . . . . take logarithms

x = log(2)/log(1.024265768) ≈ 28.91

It will take 28.91 years for the investment to double at 2.4% compounded monthly.

User DrEarnest
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