Question

Question: How long does it take an investment to quadruple in value if it earns 4% simple interest per year?

Answer 1

Answer:

It takes 75 years for the investment to quadruple in value

Step-by-step explanation:

Simple Interest

This is a simple interest problem.

The simple interest formula is given by:

$E = P*I*t$

In which E is the amount of interest earned, P is the principal(the initial amount of money), I is the interest rate(yearly, as a decimal) and t is the time.

After t years, the total amount of money is:

$T = E + P$

In this question:

4% simple interest per year, so I = 0.04.

Quadruple:

t when T = 4P.

The interest earned is:

$T = E + P$

$4P = E + P$

$E = 3P$

Now we find the time.

$E = P*0.04*t$

$3P = P*0.04*t$

$0.04t = 3$

$t = \frac{3}{0.04}$

$t = 75$

It takes 75 years for the investment to quadruple in value