Enter the annual interest rate into the calculator to determine the time it takes for money to double.
Money Doubling Formula
The following formula is used to calculate the time it takes for money to double using compound interest.
t = ln(2) / ln(1 + r)
Variables:
- t is the time in years it takes for the money to double
- r is the annual interest rate (in decimal form, so 5% would be 0.05)
To calculate the time it takes for money to double, take the natural logarithm (ln) of 2 and divide it by the natural logarithm of 1 plus the annual interest rate. The result will be the number of years it takes for the initial investment to double.
What is a Money Doubling?
A Money Doubling scheme is a type of investment scam where the fraudster promises to double the investor's money in a short period of time. These schemes often involve high-risk investments or illegal activities, and they rely on the continuous flow of new investments to pay off the earlier investors. The scheme collapses when there are not enough new investors to pay the promised returns, leaving the later investors with significant losses.
How to Calculate Money Doubling?
The following steps outline how to calculate the Money Doubling using the formula:
- First, determine the annual interest rate (r) in decimal form.
- Next, use the formula t = ln(2) / ln(1 + r) to calculate the time (t) it takes for the money to double.
- Finally, calculate the Money Doubling.
- After inserting the variables and calculating the result, check your answer with a calculator.
Example Problem:
Use the following variables as an example problem to test your knowledge.
Annual interest rate (r) = 0.05
