Suppose you pay $1000 into a savings account that pays 2% per year, compounded annually. How many years will would it take for the money in the account to double, to $2000? use "successive approximation."

Answer 1

P = Po(1+r)^n.

P = 1000(1.02)^n = 2000
1.02^n = 2
n*Log 1.02 = Log 2
n = Log 2/Log 1.02 = 35 Compounding periods.

35Comp / 1Comp/yr = 35 Yrs. To double.