How many years are required for ANY principal investment amount (P) to TRIPLE (m=3) given an...

How many years are required for ANY principal investment amount (P) to TRIPLE (m=3) given an annual interest rate of:

a) r =20%? please show all work and explain

Solutions

Expert Solution

Assuming present value to be 1

Future value = 3 * 1 = 3

Future value = Present value / (1 + rate)^time

3 = 1 (1 + 0.2)^n

3 = (1.2)^n

We take the natural log of both sides.

LN 3 = n LN 1.2

1.09861 = n 0.18232

n = 6.03

It will take 6.03 years

jeff jeffy answered 2 years ago

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