Question

How long would it take an investment to triple if it earns 1.5% interest, compounded monthly? Round your answer to the nearest hundredth.

Answer 1

73.3 years

Explanation:

Use the Compound Amount formula:

A = P(1 + r/n)^(n*t)

Here A = 3P, r = 0.015, n = 12, and so we have:

3 = (1 + 0.015/12)^(12*t). Find t (in years)

3 = (1.00125)^(12*t)

Take the log of both sides. We get:

log 3 = (12*t)(log 1.00125), or 0.47712 = (12*t)(5.425*10^(-4)

0.47712

Solving this for t, we get t = --------------------------- = 73.3 years

(12)(5.425*10^(-4))