Problema Solution
If $6,000 is placed in an account with an annual interest rate of 3.5%, how long will it take the amount to double if the interest is compounded annually?
Answer provided by our tutors
P = $6,000 the principal
r = 0.035 or 3.5% annual interest rate
A = 2P the future value (double the principal)
t = the time in years
A = P(1 + r)^t
plug the values into the last equation:
2P = P(1 + 0.035)^t
P(1 + 0.035)^t = 2P divide both sides by P
1.035^t = 2
........
click here to see all the equation solution steps
........
t = 20.15 yr
It will take 20.15 years for the amount to double.