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If it is compounded annually, then: F = P*(1 + i)^t {F is final value, P is present value, and i is interest rate, t is time}.

So if it triples, F/P = 3, and 12 years: t = 12, so we have 3 = (1 + i)^12, solve for i using logarithms (any base log will do, but I'll use base 10):

  • log(3) = log((1+i)^12) = 12*log(1+i)
  • (log(3))/12 = log(1+i).
  • Now take 10 raised to both sides: 10^((log(3))/12) = 10^log(1+i) = 1 + i
  • i = 10^((log(3))/12) - 1 = 0.095873

So a rate of 9.5873 % (compounded annually) will triple the investment in 12 years.

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Q: What annual rate of interest is required to triple an investment in 12 years?
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