Question

Solve the problem. Round your answer to three decimals. What annual rate of interest is required to double an investment in 12 years?

Answer 1

Rate of interest will be 4.42 %

Explanation:

We have given time period n = 12 years

Let the principle amount is P

It is given that amount is doubled in 12 years

So amount after 12 years A = 2P

We know that amount is given by

`A=P(1+(r)/(100))^n`

`2P=P(1+0.01r)^(16)`

`(1+0.01r)^(16)=2`

`(1+0.01r)=2^{(1)/(16)}`

`(1+0.01r)=1.0442`

`0.01r=0.0442`

`r=4.42` %

So rate of interest will be 4.42 %