Rate Needed?

[seejday1228]

I'm not understanding this question and how to do it.

What rate is needed for any amount to double itself over 16 years?


It's just a practice problem but I don't get it.

Help would be apreciated.

Thanks.

 

[stapel]

What rate is needed for any amount to double itself over 16 years?

The interest rate needed will depend to some extent on the compoundings. What other information did they give you?

When you reply, please include any formula(s) you feel are applicable and show any progress you've been able to make so far.

Thank you!

 

[Deleted member 4993]

I'm not understanding this question and how to do it.

What rate is needed for any amount to double itself over 16 years?


It's just a practice problem but I don't get it.

Help would be apreciated.

Thanks.

Adding to Staples remark,

if you assume say monthly rate (componded monthly) = r

then

\(\displaystyle A = P\cdot [1 \, + \, r]^{16*12}\)

\(\displaystyle 2P = P\cdot [1 \, + \, r]^{192}\)

\(\displaystyle 2 = \, [1 \, + \, r]^{192}\)

Following rule of 72 - your monthly rate should be, approximately,

\(\displaystyle r\, = \, \frac {72}{192}\) [sup:3dx8a6g4]%[/sup:3dx8a6g4]

 

[Denis]

(1 + i)^16 = 2
i = 2^(1/16) - 1

That'll give you the annual rate.