Question

How many years would it take for a dollar to triple in value if it earns a 6 percent rate of return

Answer 1

about 19 years

Step-by-step explanation:

The formula for determining the total amount at the end of an investment, with interest compounded annually is,

`P * (1+r)^(n) = F`

where P is the amount invested,

r is the rate of return

n is the number of years

and F is the total amount at the end of the investment.

Therefore, for $1 invested today to triple ($3) at 6% annual rate,

`1 * (1+0.06)^(n) = 3`

=
`(1+0.06)^(n) = 3`

By interpolation, the value of n that satisfies the equation is 18.9.

Therefore, the investment will triple in 18.9 years.