Question

What monthly compounding nominal interest rate is earned on an investment that doubles in 12 years

Answer 1

Answer:r=5.78 %

Step-by-step explanation:

Given

time t=12 years

Investment doubles in 12 years when compounded monthly with r rate of interest

$A=P\left ( 1+\frac{r}{n}\right )^{nt}$

where A=amount

P=principal

r=rate of interest

n=no of times interest is compounded per unit time t

t=times

here A=2P

thus $2=\left ( 1+\frac{r}{12}\right )^{12\times 12}$

$2^{0.006944}=1+\frac{r}{12}$

$1.004824=1+\frac{r}{12}$

r=0.05789

r=5.789 %