A few days ago
How long will it take you to triple your money if you invest it at a rate of 6% compounded annually?
Is there a formula for solving this?
Top 2 Answers
A few days ago
Favorite Answer
19 years.
1.06^19=3.0256
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A few days ago
The formula for calculating compound interest is
A = Ao(1+r)^n,
where A is your current amount
Ao is the amount you started your investment with
r is the interest rate
n is the number of years (since you’re compounding annually)
To solve your problem, you want A to be 3*Ao.
3*Ao = Ao(1+0.06)^n
3 = (1.06)^n
log1.06 (3) = n
The number of years is the log of 3 in base 1.06. Your calculator probably doesn’t do log in base 1.06, so you use the change of base formula:
logb (x) = log (x)/log (b)
log1.06 (3) = log (3)/log (1.06) = n = 18.85, so you need 19 years to triple your money.
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