ExplanationStart with $1, and multiply by \((1+\frac{26}{100})= 1.26\) for each year that passes. In order for the amount to double, it would have to reach $2:

End of Year 1: $1 × 1.26 = $1.26

End of Year 2: $1.26 × 1.26 = $1.5876

End of Year 3: $1.5876 × 1.26 = $2.000376 ≈ $2.00

It takes 3 years for the investment to double in value. In terms of simple interest, it would take about 4 years (since 26% is just a tiny bit more than 25% = 1/4). The compounded case earns “interest on the interest,” though, so the investment grows more quickly.

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Sandy

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