Question

Find the time required for an investment of 5000 dollars to grow to 6800 dollars at an interest rate of 9 percent per year, compounded quarterly.

Answer 1

4.14 years required for an investment of 5000 dollars to grow to 6800 dollars at an interest rate of 7.5 percent per year, compounded quarterly.

Explanation:

We are asked to find time it will take for an investment of 5000 dollars to grow to 6800 dollars at an interest rate of 7.5 percent per year, compounded quarterly.

We will use compound interest formula to solve our given problem.

A = Final amount,

P = Principal amount,

r = Annual interest rate in decimal form,

n = Number of times interest is compounded per year,

t = Time in years

Upon substituting our given values in above formula, we will get:

Take natural log of both sides:

t ≈ 4.14 (up to two decimal places)

Explanation: