EECO101

ENGINEERING ECONOMY
Compound
Interest
(Finding Time)
Time refers to the term of an investment or
how long will it take a certain sum of money
to amount to a certain other sum if it is
invested at a certain interest rate.

𝐹
log
𝑡= 𝑃 ÷𝑚
log(1 + 𝑖)
 𝐹 = 𝑃(1 + 𝑖)𝑛

𝐹
= (1 + 𝑖)𝑛
𝑃

𝐹
𝑙𝑜𝑔 = 𝑙𝑜𝑔(1 + 𝑖)𝑛 = 𝑛𝑙𝑜𝑔(1 + 𝑖)
𝑃
𝐹
𝑙𝑜𝑔 𝑃
𝑛=
𝑙𝑜𝑔(1 + 𝑖)

𝐹
𝑙𝑜𝑔
𝑡= 𝑃 ÷𝑚
𝑙𝑜𝑔(1 + 𝑖)
How long will it take P 4, 500 to amount to P 6,100 if the interest
rate is 5% compounded quarterly?
𝐹
𝑃 = 𝑃4,500 𝑙𝑜𝑔
𝑡= 𝑃 ÷𝑚
𝑙𝑜𝑔(1 + 𝑖)
𝐹 = 𝑃6,100

𝑟 = 5% 5%
𝑖= = 1.25%
4
𝑚=4
𝑃6,100
𝑙𝑜𝑔
𝑃4,500
𝑡= ÷4
𝑙𝑜𝑔(1 + 0.0125)

t = 6.12 years
How long will it take for P 7,700 to amount to P 21,100 if
invested at 16% compounded semi-annually?
𝐹
𝑃 = 𝑃7,700 𝑙𝑜𝑔
𝑡= 𝑃 ÷𝑚
𝑙𝑜𝑔(1 + 𝑖)
𝐹 = 𝑃21,100

𝑟 = 16% 16%
𝑖= = 8%
2
𝑚=2
𝑃21,100
𝑙𝑜𝑔
𝑃7,700
𝑡= ÷2
𝑙𝑜𝑔(1 + 0.08)

t = 6.55 years
Edward deposits P 100,000 in a savings account
that pays 13% interest converted semi-
annually. How long will his money
accumulate to P150,000?

t = 3.22 years