At 8.75 percent interest, how long does it take to double your money? (Enter rou

Question

At 8.75 percent interest, how long does it take to double your money? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

At 8.75 percent interest, how long does it take to quadruple your money? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

At 8.75 percent interest, how long does it take to double your money? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Explanation / Answer

Part 1)

We can use the Nper function of EXCEL/Financial Calculator to arrive at the number of years it will take to double the money. The Nper function/formula is NPER(Rate,PMT,-PV,FV) where Rate = Interest Rate, PMT = Interest Payment (if any), PV = Present Value and FV = Future Value.

__________

Here, Rate = 8.75%, PMT = 0, PV = 100 (assumed) and FV = 2*100 = 200 (assumed, doubled)

Using these values in the above function/formula for Nper, we get,

Length of Time = Nper(8.75%,0,-100,200) = 8.26 years

__________

Part 2)

We can use the Nper function of EXCEL/Financial Calculator to arrive at the number of years it will take to double the money. The Nper function/formula is NPER(Rate,PMT,-PV,FV) where Rate = Interest Rate, PMT = Interest Payment (if any), PV = Present Value and FV = Future Value.

__________

Here, Rate = 8.75%, PMT = 0, PV = 100 (assumed) and FV = 4*100 = 400 (assumed, quadrupled)

Using these values in the above function/formula for Nper, we get,

Length of Time = Nper(8.75%,0,-100,400) = 16.53 years

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