Doubling Times

Question

The doubling time of the balance for a money market certificate of deposit (CD) is 20 years. By what factor does it grow in 55 years?

(Round to the nearest tenth.)

Answer 1

A = p ( 1 + rt ), where p = principal, r = rate, t = time, A = ending amount

 

2p = p ( 1 + 20r )

2 = 1 + 20 r

1 = 20 r

5% = r

 

A = p ( 1 + (55)(0.05) )

A = p ( 1 + 2.75 )

A = p ( 3.75 )

 

After 55 years the Amount is 3.75 times the original investment.