If the interest rate is 7%, how many years will it take for your bank balance to double from $1,000 to $2,000? Enter the following data into your calculator: 1/YR - 7 PV = -1000 PMT = 0 FV = 2000 Solve for N=-----

Business Feb 01, 2021

If the interest rate is 7%, how many years will it take for your bank balance to double from $1,000 to $2,000?

Enter the following data into your calculator: 1/YR - 7 PV = -1000 PMT = 0 FV = 2000

Solve for N=-----

Expert Solution

Answer:

Future value=Present value*(1+Interest rate)^N
Here, N is the time period
Substituting the values, we get;
2000=1000*(1+7%)^N
=>2000/1000=(1.07)^N
=>2=(1.07)^N
Taking log on both sides,
Ln(2)=N*Ln(1.07)
=>N=Ln(2)/Ln(1.07)=0.693147181/0.067658648=10.24476843 or 10.24 (Rounded to two decimal places)
So, the time period is 10.24 years (approximately)

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