Explanation Given: The principal is $1,500, annual growth rate is 3.5% compounded annually. Formula used: The formula for compound interest is given by: A = P ( 1 + r m ) n Here, P is the principal, r is the annual interest rate, m is the number of compounding periods per year and n is the number of compounding periods. The exponent property of logarithms is given by: log a ( m r ) = r ( log a m ) Here, a is the base, m is the function variable and r is the power. Calculation: The formula to find the compound interest is: A = P ( 1 + r m ) n … ( 1 ) The exponent property of logarithm is, log a ( m r ) = r ( log a m ) The future value after doubling the investment, A = 2 × 1500 A = 3000 Rate can be written as r = 0 To determine (b) To find: The time required to double the investment at an interest rate of 3.5% using the rule of 72.

6th Edition

ISBN: 9780134434681

Author: Tom Pirnot

Publisher: PEARSON

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Chapter 8.2, Problem 29E

To determine

(a)

To find:

The time required to double the investment at an interest rate of 3.5% using the method of Example 7.

To determine

(b)

To find:

The time required to double the investment at an interest rate of 3.5% using the rule of 72.

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Chapter 8.2, Problem 28E

Chapter 8.2, Problem 30E

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(a) To find: The time required to double the investment at an interest rate of 3.5% using the method of Example 7.

Solution Summary: The author explains the formula for compound interest, which is given by: A=P(1+rm)n; the exponent property of logarithms is