Question

Find the time required for an investment of 5000 dollars to grow to 6000 dollars at an interest rate of 7.5 percent per year, compounded quarterly.

Answer 1

2.4536 years

Explanation:

compound formula:

A=P*(1+r/n)^nt

A = 6000

P = 5000

r = rate

n = 4 times per year compounded

t = time in years

6000 = 5000(1 + .075/4)^4t

divide both sides by 5000

1.2 = (1.01875)^4t

log both sides

log(1.2) = 4t * log(1.01875)

solve for t

t = 2.4537 years