Question

Question 4 if you deposit today $6,302 in an account earning 8% compound interest, for how long should you invest the money in order to earn $10,0007 8 5 6 > A Moving to another question will save this response.

Answer 1

We have the following formula:

FV = P * [1 + r/n]^nt

where FV = Future Value of Deposit

P = Principal Amount

r = compound interest rate

n = # of times compounded per year

t = time in years

n = 1

10,000 = 6302 * [1 + 0.08/1]^t

1.08^t = 1.586 --------------equation 1

Keeping t = 8, 1.08⁸ = 1.85

Keeping t = 4, 1.08⁴ = 1.36

Keeping t = 5, 1.08⁵ = 1.469

Keeping t = 6, 1.08⁶ = 1.586

Hence, t = 6 holds true for equation 1

Therefore, 4th option is correct

t = 6 years

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