Question

kristen invests $5,745 in a bank. The bank pays 6.5% interest compounded montly. how long must she leave the money in the bank for it to double? round to nearest tenth of a year.

Answer 1

In order to figure out when the investment will double, we only need to look at the interest rate. The equation to use to find when the investment has doubled is years = ln(2)/ln(1+interest rate), where “ln” is the natural log, and the interest rate is 0.065. Years = ln(2) / ln(1.065) Years = 11.007 = 11.0 years Alternatively, If we want to approximate with the “rule of 72”, (which is a faster, slightly less approximate method), we just divide 72 by the interest rate percentage: Years = 72/6.5 = 11.077 = 11.1 years