Problema Solution
Find the time required for money invested at an annual rate of 6% to double in value if the investment is compounded monthly. Round to the nearest hundredth of a year. You will need to choose a starting value.
Answer provided by our tutors
Here, 6% is .5% per month. Before solving, note there is a "rule of 72." A close guess is that 72/6 is the years it takes to double. 12 years will be close to the answer. 2=(1.005^N) ln2=ln(1.005^N) To solve for a power, we take the natural log of both sides of the equation. ln2=Nln1.005
N=ln2/ln1.005
N=.6931/.004987
N=138.981