Algebra

If I have 10000 dollars and the interest rate is .40% when will my money double if compounded anually?

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  1. The formula for compound interest is:

    A = P * e^(r*t)

    Where A = Amount, P = Principal Amount, r = Interest rate, t = Years to compound

    So in your case you want to know when you will have $20,000 so this is what you do:

    $20,000 = $10,000 * e^(r*t)

    Divide by $10,000 on both sides:

    2 = e^(.0040,t)

    Take the natural logarithm of each side:

    ln(2) = ln(e^(.0040*t))

    ln(2) = .0040*t

    Divide by .0040

    ln(2)/.0040 = t

    Solve using calculator:

    t = 173 years

    It will take approximately 173 years to turn $10,000 to $20,000 with a 0.40% interest rate.

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