How many years will it take for an investment to triple itself if the interest rate is 12% compounded annually?
A)10.0
B)9.70
C)9.40
D)9.10
E)8.80

Question

Quizplus · Accepted Answer

To find out how many years it will take for an investment to triple, we can use the formula for compound interest: $A = P(1 + r)^t$, where $A$ is the amount of money accumulated after n years, including interest, $P$ is the principal amount (the initial amount of money), $r$ is the annual interest rate (decimal), and $t$ is the time the money is invested for in years. We want the investment to triple, so $A = 3P$. Rearranging the formula to solve for $t$, we get $t = \frac{\log(A/P)}{\log(1 + r)}$. Substituting $A/P = 3$ and $r = 0.12$, we get $t = \frac{\log(3)}{\log(1.12)}$, which approximately equals 9.70 years.

How Many Years Will It Take for an Investment to Triple