How long does it take to double a deposit of $1000
(a) at a compound annual interest rate of 6%
(b) at a compound annual interest rate of 7%
(c) at a compound annual interest rate of 8%
(d) If instead of $1000 you deposit $5000, would the time to double your money be different in parts (a)-(c)? In other words, is the initial sum of money a factor in determining how long it takes to double your money?
Now use your answers to verify a rule of thumb that is commonly used by bankers to determine how long it takes to double a sum of money. The rule of thumb commonly used by bankers is given by:
interest rate
(d) From examining Equation (1), it is clear that the initial sum of money is not a factor in determining how long it takes to double your money.
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