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Determine how much time
required for an investment
to double in value if the
interest is earned at a rate
of 6.56%, compounded
Quarterly? Pick Best answer

Sagot :

Parrain

Answer: 11 years

Step-by-step explanation:

You can use the Rule of 72 which is a way to calculate quickly, the time it will take for an investment to double given its interest rate.

It works by:

= 72 / Interest rate

Rate is compounded quarterly so the periodic rate is:

= 6.56%/4

= 1.64%

Time taken to double = 72/1.64

= 43.9 quarters

In years that is:

= 43.9/4

= 11 years

anthougo

For an investment to double in value at an interest rate of 6.56% compounded quarterly, the period required is exactly 10.625 years.

What is an investment's future value?

The future value of an investment refers to the compounded value of its present cash flows in the future, using a stated interest rate.

The future value can be determined using the future value table or formula.

We can also determine the future value using an online finance calculator, which also enables us to determine the period required to double the present value of the investment at 6.56%.

Data and Calculations:

I/Y (Interest per year) = 6.56%

PMT (Periodic Payment) = 0

FV (Future Value) = $15,000

P/Y (# of periods per year) = 4

C/Y (# of times interest compound per year) = 4

Results:

PV = $7,513.52

Total Interest $7,486.48

N (# of periods) = 42.5 (10.625 years x 4)

The period = 10.625 years (42.5/4)

Thus, for an investment to double in value at an interest rate of 6.56% compounded quarterly, the period required is exactly 10.625 years.

Learn more about determining the required period of an investment at brainly.com/question/20392017

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