Find the time required for an investment of 5000 dollars to grow to 6000 dollars at...

Question

Question

Answer 1

Answer #1

Present Value = $5,000
Future Value = $6,000

Annual Interest Rate = 7.50%
Quarterly Interest Rate = 1.875%

Let time period be t quarters

Present Value * (1 + Quarterly Interest Rate)^Period = Future Value
$5,000 * 1.01875^t = $6,000
1.01875^t = 1.20
t * ln(1.01875) = ln(1.20)
t = 9.815

Number of quarters = 9.815
Number of years = 9.815 / 4
Number of years = 2.45

Answer 2

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