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Consider an investment of $1,000. (a)Calculate the time taken for this investment to quadruple in value to $4,000 at an interest rate of 2% per
Consider an investment of $1,000.
- (a)Calculate the time taken for this investment to quadruple in value to $4,000 at an interest rate of 2% per annum compounded annually. Round your answer down to the nearest year.
- (b)Calculate the time taken for this investment to quadruple in value to $4,000 at an interest rate of 5% per annum compounded annually. Round your answer down to the nearest year.
- (c)Calculate the time taken for this investment to quadruple in value to $4,000 at an interest rate of 7% per annum compounded annually. Round your answer down to the nearest year.
- (d)Using your answers to (a), (b) and (c), write down a simple mathematical formula for quadrupling time Q years in terms of the annual interest rate i % with annual compounding. Do not use the logarithmic (log) function in your formula. Your formula should be valid for low interest rates. Illustrate that your formula works for i=2, i=5 and i=7.
- (e)Using your answer to (d), write down a simple mathematical formula for doubling time D years in terms of the annual interest rate i % with annual compounding. Your formula should be valid for low interest rates.
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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
10th Canadian edition
1259261018, 1259261015, 978-1259024979
