The formula

can be used to find the number of years t required to multiply an investment m times when r is the per annum interest rate compounded n times a year.

(a) How many years will it take to double the value of an IRA that compounds annually at the rate of 12%?

(b) How many years will it take to triple the value of a savings account that compounds quarterly at an annual rate of 6%?

(c) Give a derivation of this formula.

Problem involves zero-coupon bonds. A zero-coupon bond is a bond that is sold now at a discount and will pay its face value at the time when it matures; no interest payments are made.

Transcribed Image Text:

In m n In 1 + п) n