What interest rate would you need in order for $2000 to double in 4 years if...
What interest rate would you need in order for $2000 to double in 4 years if the amount is compounded monthly? Show formula used
Homework Answers
We use the formula:
A=P(1+r/12)^12n
where
A=future value
P=present value
r=rate of interest
n=time period.
(2*2000)=2000*(1+r/12)^(12*4)
(2)^(1/48)=(1+r/12)
(1+r/12)=1.014545335
r=(1.014545335-1)*12
=17.45%(Approx).
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