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How to use the Periodically Compound Interest formula (see details)?
hi im stuck at the questiona bout this. the Continuosly compounded formula is easy but i cant see to find the periodically compound one ( the one missing is the time in years or t)
the question goes like this:
How long does it take money to double in value for the specific interest rate?
Question is: What is the doubling time of an investment earning 12% interest if the interest is compounded every 2 months
i use the formula
A=P*(1+r/n)^nt
A= 2
P=1
i assigned those 2 constants because the question itself doesnt have one and the question says: "doubling time" so its just times 2, for simplicity i used 1 as the principal. correct me if im wrong ^^ or if i used the wrong formula
Best answer goes to someone who answers it in 1 hr
3 Answers
- DavidLv 71 decade agoFavorite Answer
you are using the correct formula
now if the interest is compounded every two months, then it is compounded 6 times a year
n=6
2=1(1+(.12/6))^(6*t)
2 = 1.02^6t
ln 2 / ln 1.02^6 = t
5.8337981301910883936976561871535 = t
5.83 years
- 6 years ago
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RE:
How to use the Periodically Compound Interest formula (see details)?
hi im stuck at the questiona bout this. the Continuosly compounded formula is easy but i cant see to find the periodically compound one ( the one missing is the time in years or t)
the question goes like this:
How long does it take money to double in value for the specific interest...
Source(s): periodically compound interest formula details: https://bitly.im/4Sf52