Suppose you invest your money into an account that pays 4.0% per year compounded quarterly. How long (in years) will it take for your money to triple?
Round your answer to one decimal place.
I know I use this...
A=P(1+r/n)^nt
But to go from there and get an answer, so confused. Thank you for your help!
Eq1: Pt = Po(1+r)^n.
Eq2: Pt = 3Po.
r = (3mo./12mo.) * 4% = 1% = 0.01 =
Quarterly int rate expressed as a decimal.
n=4 comp./yr * t yrs.=4tcomp. periods.
In Eq1,substitute 3Po for Pt:
3Po = Po(1.01)^4t,
Divide both sides by Po:
(1.01)^4t = 3,
Take Log of both sides:
4t*Log(1.01) = Log3,
4t = Log3 / Log(1.01) = 110.41,
t = 27.6 yrs.