How long would it take an investment to double under each of the following conditions?(a) Interest is 3.3% compounded monthly. (Enter your answer as a whole number of years and months.)monthsyears and(b) Interest is 7% compounded continuously. (Round your answer to three decimal places.)years

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Asked Sep 20, 2019
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How long would it take an investment to double under each of the following conditions?
(a) Interest is 3.3% compounded monthly. (Enter your answer as a whole number of years and months.)
months
years and
(b) Interest is 7% compounded continuously. (Round your answer to three decimal places.)
years
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How long would it take an investment to double under each of the following conditions? (a) Interest is 3.3% compounded monthly. (Enter your answer as a whole number of years and months.) months years and (b) Interest is 7% compounded continuously. (Round your answer to three decimal places.) years

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Expert Answer

Step 1

(a)

Interest Rate = 3.3%

Type of Compounding = Monthly

Number of Compounding = 12

 

Assumption:

Present Value of Investment = $1

Future Value of Investment = $2

 

Calculation of time period required to double the investment using excel NPER function:

To open the "NPER function" window - MS-Excel --> Formulas --> Financials --> NPER.

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|=NPER NPER(rate, pmt, pv, [fv], [type]) |=NPER(3.3%/12,.-1,2) 252.40

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Step 2

(b)

 

Interest Rate = 7% or 0.07

Type of Compounding = Continuously

 

Assumption:

Present Value of Investment = $1

Future Valu...

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In (Future Value of Investment) eRate of Interest Time Period In (2) e0.07 0.69314718 1.07250518 =0.65

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