Solution :
It is given that :
Amount of investment or the principle amount , P = $ 100
Time of investment , t = 6 years
Rate of interest compounded annually r = 6 %
Therefore the future amount of this investment in a 6 year time is given by,
Therefore, after 6 years the investment of $ 100 will give an amount of $ 141.
Answer:
1. 11.90
2. 23.79
Explanation:
How Long Does It Take To Double Your Money?
A=P(1+r/100)^n
where
A=future value($2x say)
P=present value($x say)
r=rate of interest
n=time period.
SOLUTION
A=P(1+r/100)^n
2x=x(1+6/100)^n
Divide both side by x
2=(1+6/100)^n
2=(1.06)^n
Taking log on both sides;
log 2=n*log 1.06
Making n subject of the formular
n=log 2/log 1.06
=11.90 years(Approx).
How Long Does It Take To Quadruple Your Money?
We use the same formula:
A=P(1+r/100)^n
where
A=future value($4x say)
P=present value($x say)
r=rate of interest
n=time period.
SOLUTION
A=P(1+r/100)^n
4x=x(1+6/100)^n
Divide both side by x
4=(1+6/100)^n
4=(1.06)^n
Taking log on both sides;
log 4=n*log 1.06
Making n subject of the formular
Hence n=log 4/log 1.06
=23.79 years(Approx).
It is c ..........................................................................................................................................................................