Question

If you could explain this and answer it, I would greatly appreciate it.

C. Use Excel (or equivalent application) to determine how long it will take for an investment to triple in value at interest rates of 1%, 5%, 10%, 15%, 20%, and 25%. Can you determine an approximate “Rule” for how to quickly calculate how long it takes for an investment to triple in value?

Answer 1

formula : NPER (rate,,pv,fv) - double comma after rate as PMT is missing.

pv = -100 because 100 is an assumed amount. Negaive sign because it is investment going out of pocket.

a) for 1%:

pv	-100
fv	300
years	110.4096
annl rate	0.01

b) for 2%:

pv	-100
fv	300
years	55.47811
annl rate	0.02

c) for 5%:

pv	-100
fv	300
years	22.51709
annl rate	0.05

d) for 10%:

pv	-100
fv	300
years	11.5267
annl rate	0.1

e) for 15%:

pv	-100
fv	300
years	7.860597
annl rate	0.15

f) for 20%:

pv	-100
fv	300
years	6.025685
annl rate	0.2

g) for 25%:

pv	-100
fv	300
years	4.923343
annl rate	0.25

Rule of 115: A general rule can be established. To know how many years it takes to triple an investment, we must divide the number 115 by the rate of interest (whole number). So, using that rule:

a) for 1%: 115/1 = 115 years

b) for 2% 115/2 = 57.5 years

c) for 5%: 115/ 5 = 23 years

d) for 10%: 115/10 = 11.5 years

e) for 15%: 115/15 = 7.67 years

f) for 20%: 115/ 20 = 5.75 years

g) for 25%: 115/ 25 = 4.6 years