1. How long will it take to triple your investment if you are earning a simple interest 5 percent annually?

Question

a) 12.5 years b) 15 years c) 20 years d) 40 years

2. If the interest rate per compounding period is 2.3% and the annual interest rate is 9% what is the compounding frequency.

a) annually b) semi annually c) quarterly d)monthly

how do i solve these.

Answer 1

(1+.05n) = 3
you are adding 1/20 of the principal each year, so it will take 40 years to add twice the original amount.

9/2.3 = 3.9
That is, the 9% is divided into 3.9 equal parts.
so, quarterly

Answer 2

1. Po + Po*0.05*T = 3Po.
Divide both sides by Po:
1 + 0.05T = 3,
T = 40 yrs.