Doubling Time Formula

Formula

n to double = LN(2) / LN(1 + i)
Variables used in the formula
i = Discount rate
n = Number of periods to double the investment
LN = natural logarithm

Use

The doubling time formula is used to work out the amount of time (n) it takes to double the value of a lump sum investment allowing for a given discount rate (i%).

Excel Function

The Excel NPER function can be used instead of the doubling time formula, and has the syntax shown below.

NPER(i,pmt,PV,FV,type)

*The pmt and type arguments are not used when calculating the doubling time for a lump sum. In addition, as FV = 2 x PV when the investment doubles in value, PV should be set to -1, and FV should be set to 2 as follows:

NPER(i,pmt,-1,2,type)

Doubling Time Formula Example

If an investment is made at the start of period 1, and the discount rate is 5%, then the number of periods it takes to double the value of the investment is given by the doubling time formula as follows:

n to double = LN(2) / LN(1 + i)
n to double = LN(2)/ LN(1 + 5%)
n to double = 14.21 periods

The same answer can be obtained using the number of periods formula in Excel as follows:

n = NPER(i,,PV,-FV)
n to double = NPER(5%,,-1,2)
n to double = 14.21 periods

*don’t forget the minus sign on PV

The Rule of 72 can be used as an approximation to the doubling time formula.

The doubling time formula is one of many used in time value of money calculations, discover another at the links below.

Doubling Time Formula November 6th, 2016Team

You May Also Like


Related pages


how to find total manufacturing overhead costcash book example 2 columnsdepreciation formula accountinghow to calculate total variable cost per unitsample chart of accounts for non profit organizationsledger printablefixed overhead costwhat is the meaning of accrued interestreplenishment of petty cashjournal posting accountingfreight payable at destinationobsolete stockfob sellerpay dividend journal entryjournal entries debits and creditseir calculationexample statement of retained earningshow to calculate finished goods producedskillcheck online testingwhat is the first step in the accounting cycleaccounting entry for bad debtsformula of cost of good soldbank reconciliation formulawhat is sales ledger control accountpetty cash book pdfformat of a petty cash bookselling and administrative expenses formulacash flow reconciliation templateusing fv function in excelcontinuous compounding rateexpense template for small businesspresent value and future value tablessum of digits depreciationaccounts receivable turnover days formularevenue recognition formulaprovision for losses on accounts receivablea subsidiary ledgerdiscounting rate formulawip accounting definitioncontribution margin vs profit margincost markup formulaexample of double declining balance methodstraight line depreciation rate formuladisbursement ledgerdupont analysis templatecompound depreciation calculatoroverheads in accountingentry for bad debtsexample of owner equitydifference between periodic and perpetualprepaid expenses balance sheet examplebeginning inventory plus the cost of goods purchased equalsunrealized gain loss journal entryaccrual accounting versus cash accountingimplicit calculatorsample of bookkeepingprepayment accounting entriespresent value calculator exceldays receivable ratio formulaannuity factor tablesstandard costing and variance analysis examplesdouble declining method depreciation formuladeferred income double entryperpetual inventory recordspercentage of sales method for calculating doubtful accountsgeneral ledger account balancesclassification quizincome statement balance sheet cash flow template exceljournal entry deferred revenuecontinuously compounded formulaindirect labor is a part ofdeclaring a dividendcapital turnover ratio interpretationamortization straight lineaccounts payable turnover calculatorformula for cash conversion cycledeferred expenses definitionvertical analysis in accountingbookkeeping and accounting notesprepaid rent expense journal entrypurpose of remittance adviceexplain debtors