Compound Interest, SMB-018 MC

Gerry invests $10 000 at an interest rate of 5.5% per annum, compounding annually.

After how many years will his investment first be more than double its original value?

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`B`

Show Worked Solution

`FV=PV(1+r)^n`

`r=5.5% = 0.055, PV=10\ 000`

`text(Find)\ n\ text(when)\ FV>20\ 000:`

`10\ 000(1+0.055)^n`	`> 20\ 000`
`1.055^n`	`> 2`

`text(Test answer options:)`

`1.055^12 = 1.90`

`1.055^13 = 2.005`

`=> B`