At a growth (interest) rate of 8 percent annually, how long will it take for a sum to double? To triple? Use Appendix A for an approximate answer, but calculate your final answer using the formula and financial calculator methods.

n =   ㏒ P ÷ ㏒ (1.08)

Explanation:

Compound interest rate

A = P ×

where

P = principal amount (the initial amount you borrow or deposit)

r  = annual rate of interest (as a decimal)

A = amount of money accumulated after n years, including interest.

n  =  number of years

Since we want the principle amount to double i.e., A = 2P

put this in above equation

2P = P ×

divide both sides by P, we get

P =

put r = 0.08

P =

P =

Taking log on both sides

㏒ P =㏒

㏒ P = n ㏒ (1.08)

n =   ㏒ P ÷ ㏒ (1.08)

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