Question

Kari would like to save $10,000 for a down payment on a house.Illustrate the difference in years it will take her to double her current $5,000 savings based on a 6%, 12% and 18% interest rate.

Answer 1

Answer:

This question requires us to tell the time in which investment of $ 5000 will double based on a 6%, 12% and 18% interest rate. Time period (n) based on a 6%, 12% and 18% interest rate is calculated below.

(FV =PV (1+i)^n)

6%

10,000 = 5,000 (1.06)^n

Log 2 = n log 1.06

n = 11.9 years

12%

10,000 = 5,000 (1.12)^n

Log 2 = n log 1.12

n = 6.1 years

18%

10,000 = 5,000 (1.12)^n

Log 2 = n log 1.18

n = 4.2 years