You deposit $20,000 in an account that doubles in 7 years. How many years will it take the account to be reduced to its original value if it loses 12 percent per year?
A)4.92 years
B)5.42 years
C)6.62 years
D)8.22 years

Question

Quizplus · Accepted Answer

To find how many years it takes for the account to reduce to its original value, we use the formula for exponential decay: $ P = P_0 (1 - r)^t $. Here, $ P_0 = 40,000 $, $ P = 20,000 $, and $ r = 0.12 $. Solving $ 20,000 = 40,000 (1 - 0.12)^t $ gives $ t \approx 5.42 $ years.

You Deposit $20,000 in an Account That Doubles in 7