help help i do not understand which equations to use

Question

An investor deposits $2000 in a mutual fund that returns 11% at the end of 1 year. Determine the length of the time required for the investment to double its value if the annual rate of return remains the same.

Answer 1

The formula you would use depends on whether the interest is simple or compound.

 

For simple:

A = p(1 + rt)

4000 = 2000(1 + 0.11t)

2 = 1 + 0.11t

1 = 0.11t

9.09090 ≈ t

 

For compound:

A = p( 1 + r)^t

4000 = 2000(1 + 0.11)^t

2 = 1.11^t

ln 2 = t ln 1.11

0.6931 ≈ 0.1044t

6.6580 ≈ t