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by birks Accepted solution
by bschaettle Accepted solution
Don't lean too heavily on Excel's built-in financial functions if you're not sure EXACTLY what they calculate. I would start from the basics and build your own formula.
OK, here is the formula for Future Value:
FV = PV * (1+i)^n
In your case, you want the future value to be twice the present value, so we can write
FV = 2*PV
substituting, we now have:
2*PV = PV * (1+i)^n
Now solve for n:
2 = (1+i)^n
LOG(2) = LOG((1+i)^n)
LOG(2) = n * LOG(1+i)
n = LOG(2) / LOG(1+i)
written as an Excel formula, this would be
=LOG(2)/LOG(1+A2)
where cell A2 would have the interest rate as a decimal.
For example, if you type 0.08 into cell A2, this formula will yield 9.006 telling you that at 8 percent simple interest your money would double in 9 years.
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