Time to accumulate a given sum Personal Finance Problem Manuel Rios wishes to de

Question

Time to accumulate a given sum Personal Finance Problem Manuel Rios wishes to determine how long it will take an initial deposit of $7,000 to double. a. If Manuel earns 9% annual interest on the deposit, how long will it take for him to double his money? b. How long will it take if he earns only 6% annual interest? C. How long will it take if he can earn 11% annual interest? d. Reviewing your findings in parts a, b, and c, indicate what relationship exists between the interest rate and the amount of time it will take Manuel to double his money a. If Manuel earns 9% annual interest, the armount of time to double his money is years. Round to two decimal places.

Explanation / Answer

a. time taken to double = log2/log(1+r)

when r = 9%, time taken = log/2/log1.09 = 8.04%

b. time taken = 11.90 years

c. time taken = 6.64 years

d. higher the interest rate lesser the number of time taken

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