How many years it will take an investment to triple itself

Assignment Help Econometrics

Reference no: EM13206977

1. compare the interest rate earned on $15000 for 25 years at 7% simple interest with the amount of interest earned if interest were compounded annually?

SIMPLE INTEREST:
I=iPN=(0.07)($15,000)(25)
I=$26,250

COMPOUND INTEREST
I=P[(1+i)^N-1]
I=$15,000[(1+i)^25-1]
I=$66,411.5

2.how many years will it take to double your investment of $2000if it has an interest rate of 6% compound
annually?

F=2P=P(1+0.06)^N
LOG2=N LOG1.06
N=11.9 OR 12 YEARS

3. how many years it will take an investment to triple itself if the interest rate is 7%compound annualy?

F=3P=P(1+I)^N
LOG3=N LOG(1+0.07)
N=16.24 OR 15 YEARS

Reference no: EM13206977

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