Answer to Question #181753 in Macroeconomics for SYEDA ZAINAB

Question

How many years an investment would be four times its initial value at an interest rate of 11 percent.

Answer 1

Assume the investment is X;

r=0.11

Use grow it using the following formula.

$X(1+r)^n=4X$

Divide both sides by X;

$\frac{X(1+r)^n}{X}=\frac{4X}{X}$

$(1+r)^n=4$

Substitute for r;

$(1.11)^n=4$

Introduce logarithmic

$n log 1.11=log 4$

$n= \frac{log 4}{log 1.11}=13.28 years$

Investment will be 4 times after a lapse of 13.28 years.