Question

The value of the investment is expected to grow by 3% per year.

Answer 1

Answer:

D. About 24 years

Step-by-step explanation:

Compounding is the means the future value of an amount saved today while discounting means the present value of a future amount.

In other words, we discount to know the present value of $1 in the future while we compound to know the future worth of $1 saved today.

Let the value of the investment be x. if it is expected to double in n years then using the compound interest formula

fv = pv(1 + r)^n

where fv and pv are the future and present values respectively and n is the time, r is the growth rate

2x = x(1 + 0.03)^n

2 = (1.03)^n

log 2 = log (1.03)^n

= n log 1.03

n = log 2/ log 1.03

n = 23.44

This is approximately 24 years hence option D is right

Answer 2

3 times 24 is 48% therefore its D.