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The formula below tells us how to obtain the maturity value on a simple discount loan if we are given the proceeds, the discount rate, and the term. LaTeX: M = \frac{P}{1-d_RT}M = P 1 − d R T If a loan's annual simple discount rate is 2.14%, how many years would it take for the debt to double? (This is called the doubling time of a loan). Round your answer to the nearest tenth of a year. Hint: divide both sides of the equation by P. If M is twice as much as P, what should the fraction on the left-hand side equal?

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nuhulawal20

Answer: it will take 23.4 YEARS for the debt to double.

Explanation:

Given that;

formula for maturity value on simple discount loan M =  P / ( 1 - dRT )

loan's annual simple discount rate = 2.14%

our dR given as 2.14% = 2.14/100 = 0.0214

from the question, if the debt double i means M = 2P

so

2P =  P / ( 1 - dRT )

we substitute

2P =  P / 1 - (0.0214)T

T = 1 / 2*0.0214

T = 1 / 0.0428

T = 23.3644 = 23.4 YEARS

therefore it will take 23.4 YEARS for the debt to double.

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