You have a loan of $1,000 with a 20% interest rate compounded annually. You don't pay anything off. How long will it take for the amount to double?

Oh, boy, we're compounding again. That means you're paying interest on interest. So, instead of taking your $1,000 x 20% = $200, and $200 x 5 years to double $1,000, you compound the interest every year. For instance, year 2 would already put you at $1,440 (1,200 x 20%), so you know you'll be doubling the bottom line before five years are up.

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