Solve the problem.
-What is the rate on an investment that doubles $5777 in 16 years? Assume interest is compounded quarterly.
A) 2.2%
B) 3.3%
C) 5.4%
D) 4.4%

Question

Quizplus · Accepted Answer

To find the interest rate that doubles an investment in 16 years with quarterly compounding, we use the formula for compound interest: $A = P(1 + \frac{r}{n})^{nt}$, where $A$ is the amount after time $t$, $P$ is the principal amount (initial investment), $r$ is the annual interest rate, $n$ is the number of times the interest is compounded per year, and $t$ is the time the money is invested for in years. Here, $A = 2P = 2 \times 5777$, $n = 4$ (quarterly), and $t = 16$. Rearranging the formula to solve for $r$, and substituting the given values, we find that $r = 4.4\%$.

Solve the Problem. -What Is the Rate on an Investment That Doubles $5777