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Senior Manager
Joined: 16 Feb 2011
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Compound Interest!! [#permalink]
 26 Aug 2011, 23:49
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Well it's a very easy question which I seem to be getting wrong...for most of you this might be like a cherry on the cake hence, would REALLY appreciate if someone can help me with the workings.
A total of 1000$ was invested at compounded annual interest rate. At the end of 12 years, the total value will be 4000$. How many years are needed to reach a total of 8000$.
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Director
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Re: Compound Interest!! [#permalink]
27 Aug 2011, 20:14
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Compound Interest A = P(1+r/n)^(nt)
Here n = 1 as its calculated annually.
t = 12
4000 = 1000(1+r)^12
4 = (1+r)^12
=> 4^(1/12) = 1+r equation 1
8000 = 1000(1+r)^n
8 = (1+r)^n
=> 8 = (4^(1/12))^n => 2^3 = 4^(n/12)
=> 2^3 = 2^(n/6)
> 3 = n/6 => n = 18 years
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Intern
Joined: 17 May 2009
Posts: 36
Location: United States
GMAT 1: 770 Q51 V44
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Re: Compound Interest!! [#permalink]
28 Aug 2011, 16:24
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1000*r^12 = 4000
r^12 = 4
(r^6)^2 = 2^2
r^6 = 2
It takes 6 years for the investment to double.
2 * 2 * 2 = r^6 * r^6 * r^6
8 = r^18
It takes 18 years for the investment to double three times.
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Senior Manager
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Re: Compound Interest!! [#permalink]
28 Aug 2011, 21:45
Thanks Spidy & Bodleyev..
+1 to both for helping..
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Re: Compound Interest!! [#permalink]
29 Aug 2011, 03:34
bodleyev nice way of approcahing the solution .. it definitely saves some time.
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Re: Compound Interest!!
[#permalink]
29 Aug 2011, 03:34
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