Question

How long would it take to double your investment if you invest $2,000 at 7.5% compounded quarterly?

a. Less than 8 years
b. Between 8 and 9 years
c. Between 9 and 10 years
d. Between 10 and 11 years
e. More than 11 years

Answer 1

c. Between 9 and 10 years

Step-by-step explanation:

The computation of the time period is shown below:

Future value = Present value × (1 + interest rate)^number of years

$4,000 = $2,000 × (1 + 7.5% ÷4)^time period ×2

After solving this

The time period is

= 9.3283

Hence, it lies between the 9 and 10 years

Therefore the correct option is c.

And all other options are wrong.