Answer to Question #196933 in Financial Math for Beauty Magadlela

Question

If money is worth 12% per annum, compounded monthly, how long will it take the principal P to double? [1] 69,66 years

[2] 8,33 years

[3] 7,27 years

[4] 6,12 years

[5] None of the above

Answer 1

expected net cash flows are as follows:

Here $10,000 is assumed to be the principal amount.

Hence, it would be take 69.66 months for the principal to double which makes 5.805 years. Since this is not an option available so D is the correct choice.