Chapter 3, Problem 1P

To determine

Calculate the time period.

Explanation of Solution

Time period is denoted by n and the interest rate is denoted by i. Time period with 7.5% simple interest can be calculated as follows.

$\begin{array}{c}\left(1+\left(\text{i}\times \text{n}\right)\right)\text{1}=2\\ \text{n}=13.33\end{array}$

Time period is 14 years.

Time period with 7% compounded yearly interest can be calculated as follows.

$\begin{array}{c}{\left(1+\text{i}\right)}^{\text{n}}\text{1}=2\\ \text{n}=11\end{array}$

Time period is 11 years.