Question

How lo g would it take to double your money in an account paying 4% compounded quarterly? ignoring leap years, the investment should be doubled in ___ years and ___ days. (rounding to the nearest whole number as needed)

Is this solvable in Excel? If yes, what is the formula to make it work?

Answer 1

Lets assume the initial amount to be 100
Now to double this amount it will be 100 * 2 = 200
Interest Rate = 4% compounded quarterly
We have to find no. of years it will take to double up at the given rate of return.

In financial terms,
PV = $100
FV = $200
Periodic Interest Rate = 4% /4 = 1% compounded quaterly
We have to find no of years.

By using the formula to calculate Number of Periods in excel. The formula is
NPer(Rate, PMT, Present Value, Future Value, Type)
where,
Rate = Interest Rate
PMT = Periodic Payments
Type is 0 if PMT are made on the end of year and 1 if the payments are made at the beginning of year.
Using the formula
N = 69.66 quarters (rounded off)
No of years = 69.66 /4 = 17.415 Years

Solving for fraction
No of days = 365 * .41518
              = 152 days (upper rounding off)

So the investment will be doubled in 17 Years and 152 days.