How long will it take for an investment to triple?

Question

How long will it take for money to triple if it is invested at the following rates?

1) 3% compounded monthly

2) 2% compounded annually

Answer 1

A = p(1+r/n)^nt

A = future amount

p = principal investment

r = interest rate in decimal form

n = # times compounded per year

t = time in years

 

3p = p(1+0.03/12)^12t

3 = 1.0025^12t

Take log of both sides

log 3 = log 1.0025^12t

log 3 = 12t(log 1.0025)

 

t = (log 3)/(12 log 1.0025)

 

t = 36 2/3 years = 36 years 8 months

 

Problem 2:

3p = p(1 + 0.02/1)^1t

3p = p(1.02)^t

 

Work the same way as problem 1