Question

What rate of interest compounded annually is required to triple an investment in 29 years?

Answer 1

At a rate of interest of `3.86%` compounded annually investment will be tripled.

Explanation:

An amount `I` invested for `29` years at a rate of `r%` compounded annually becomes

`I(1+r/100)^29`

but as it triples, it must have become `3I`

and hence `I(1+r/100)^29=3I`

or `(1+r/100)^29=3`

or `29log(1+r/100)=log3`

or `log(1+r/100)=log3/29=0.01645`

or `1+r/100=10^0.01645=1.0386`

or `r/100=0.0386`

or `r=3.86%`