Thinking Mathematically (6th Edition)

Published by Pearson
ISBN 10: 0321867327
ISBN 13: 978-0-32186-732-2

Chapter 8 - Personal Finance - 8.3 Simple Interest - Exercise Set 8.3: 44

Answer

The time required for an amount of money to double in value is given by $t = \frac{1}{r}$

Work Step by Step

This is the formula we use when we make calculations with simple interest: $A = P~(1+rt)$ $A$ is the future value $P$ is the present value $r$ is the interest rate $t$ is the number of years Let's suppose that the future value is $2P$. We can find the time $t$ that is required to reach this future value. $A = P~(1+rt)$ $2P = P~(1+rt)$ $2 = 1+rt$ $rt = 1$ $t = \frac{1}{r}$ The time required for an amount of money to double in value is given by $t = \frac{1}{r}$
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