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Thread: Interest problem

  1. #1
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    Interest problem

    In its first 10 years a mutual fund produced an average annual return of 21.55%. Assume that money invested in this fundcontinues to earn 21.55% compounded annually. How long will it take money invested in this fund to double?
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  2. #2
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    Re: Interest problem

    Compound interest formula:
    A=P(1+i)^n
    P is the principal (initial amount invested)
    A is the final amount ...... here A=2*P....(the money invested in this fund doubles)
    i = 0.2155
    You need to find n.
    Hint: It will involve logarithms.
    See how you go!
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  3. #3
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    Re: Interest problem

    Geesh...another problem made up by a long-winded teacher; this is plenty:
    how long does it take $1 to double at 21.55% compounded annually?

    1.2155^n = 2
    solve for n
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  4. #4
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    Re: Interest problem

    Thank you!!
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