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How do you find the number of years it takes to double a principle on compound interest?
Wiki User
∙ 13y ago
If you have studied logarithms, the answer is simple:
The number of years = log(2)/log(1 + r/100) where the annual rate of interest is r%. The logs can be to any base: 10 or e (or any other base).
The number of years for it to treble is log(3)/log(1 + r/100) and so on.
Without logs, it is a question of trial and error. 100/r year WILL be too large.
Wiki User
∙ 13y ago
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What is compound interest of 1500 dollars for 5 years at interest of 5 percent?
Compound interest functions can be represented as [(1+i)^t]*n, where i = interest rate t = time n = original number [(1.05)^5]*1500 = $1914.42
What is the formula for double growth annuity rate?
It is called the rule of 72. You take the interest rate you will be receiving and divide that number into 72. the answer will be the number of years it will take you to double your money at that interest rate.
How compound interest formula is helpful for a financial institution in order to calculate the amount due by customers?
In fact compound interest is exciting if you're lending but dangerous if you're borrowing as the interest is added to the principal and itself attracts interest. To calculate compound interest use the Rule of 42. Divide the rate of interest into the number 42 and the answer is the number of periods - usually years when dealing with annual interest - for the principal, i.e. the sum borrowed and therefore the amount to be paid back, to double in value. Example: borrow $1000 at 6% p.a., pay nothing each year and you will owe $2000 at the end of 7 years. Conversely, use the rule of 42 to find out the rate of depreciation. If your $10,000 car depreciates at 6% a year then it will be worth $5000 at the end of 7 years.
What mathematical principle is equal to 3.14?
That's not a "mathematical principle", it is an approximation of the number pi.That's not a "mathematical principle", it is an approximation of the number pi.That's not a "mathematical principle", it is an approximation of the number pi.That's not a "mathematical principle", it is an approximation of the number pi.
How can compound interest be derived from simple interest?
Compound interest is simply simple interest except the amount of interest you owe is always added into the amount of money you borrowed before you calculate.Lets give an example.You borrowed a million from the bank at Year 2000 with interest rates of 5%.The formula for simple interest is PIN/100, where P is Principle (amount owed), I is interest rate (in percentage), N is the number of years.Year 2000: 1,000,000Year 2001: 1,000,000 * 5 * 1 / 100 = 50,000 (this is the interest)Year 2002: (1,000,000 + 50,000) * 5 * 1 / 100 = 52,500By the end of 2002, you would owe the bank 1,102,500(1,000,000 + 50,000 + 52,500)The formula for compound interest is P * (1 + I/100)N where P,I and N still refers to the same thing.Year 2000: 1,000,000Year 2001: 1,000,000 * (1+5/100)1 = 1,050,000Year 2002: 1,050,000 * (1+5/100)1 = 1,000,000 * (1+5/100)2 = 1,102,500
What is the formula for a simple compound interest rate?
Simple Interest = p * i * n p is principle and i is interest rate per period and n is the number of periods. A = P(1 + r)n is for compound interest.
What is earning interest on interest?
Compound interest. This is where you work out the interest on a number, then work out the interest on top of the number with the interest added.
How do you convert simple interest to compound interest?
There is a quick and dirty way to convert simple interest to compound interest. First you need to know how long it will take to double your initial number. For Example: Let's say that you find an investment that pays 10% simple interest. That means it takes 10 years to double your investment. We then use the rule of 72 to determine the rate of compound return will give an equivalent time. The rule of 72 says that you divide either the rate of return or the time period into 72 to come up with the other. So, in this example we want to know what interest rate would double our money in 10 years. divide 72 by 10 = 7.2 This means that 7.2% compound interest is equal to 10% simple interest.
How long will money in savings take to double at 5 percent interest compounded annually?
Use the "rule of 72"...simply put, using compound interest you take the number 72 and divide it by the interest rate. Thus, at 5% the time to double is 14.4 years. This formula can be used for calculating a "double" for any interest rate using the same mathematical procedure.
How can you compare simple and compound interest?
Simple interest is calculated one time @ a specified rate over a specific length of time. Compound interest is calculated multiple times @ a specified rated divided by the number of given periods within a specified time. example: $100 @ 10% interest over 1 year. Simple interest: principle x rate x time = interest; $100 x .10 x 1 = $10 example: $100 @ 10% interest compounded quarterly over 1 year. Compound interest: principle x {(1 + rate / #periods)n} = interest $100 x {(1 + .10 / 4 )^4} = $100 x (1 .025 )^4 = $100 x 1.1038 = $10.38
The concepts of simple interest and compound interest and how these affected the results of your investment exercise?
Simple interest (compounded once) Initial amount(1+interest rate) Compound Interest Initial amount(1+interest rate/number of times compounding)^number of times compounding per yr
How can one calculate their interest?
The formula used to calculate your interest is the principle balance, multiplied by the monthly interest rate. Then you mulitply that by the number of months in which you last paid interest.
What is compound interest of 1500 dollars for 5 years at interest of 5 percent?
Compound interest functions can be represented as [(1+i)^t]*n, where i = interest rate t = time n = original number [(1.05)^5]*1500 = $1914.42
How Was the Number E Discovered?
Euler's number, e, was discovered by Jacob Bernoulli when he was studying compound interest.
What is the formula for double growth annuity rate?
It is called the rule of 72. You take the interest rate you will be receiving and divide that number into 72. the answer will be the number of years it will take you to double your money at that interest rate.
How do you figure out interest?
There are two types of interest, simple and compound: Simple Interest is calculated by p*r*t where, p = principal (original amount invested) r = interest rate for one period t = time Compound Interest is calculated by p * (1+ (r/n)) ^ n*t where, p = principal r = interest rate n = number of times per year the interest is compounded t = number of years invested
How compound interest formula is helpful for a financial institution in order to calculate the amount due by customers?
In fact compound interest is exciting if you're lending but dangerous if you're borrowing as the interest is added to the principal and itself attracts interest. To calculate compound interest use the Rule of 42. Divide the rate of interest into the number 42 and the answer is the number of periods - usually years when dealing with annual interest - for the principal, i.e. the sum borrowed and therefore the amount to be paid back, to double in value. Example: borrow $1000 at 6% p.a., pay nothing each year and you will owe $2000 at the end of 7 years. Conversely, use the rule of 42 to find out the rate of depreciation. If your $10,000 car depreciates at 6% a year then it will be worth $5000 at the end of 7 years.
