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Question 389761: four years ago, jonny invested $4000 at 5.4% intrest compunded annually. five years ago, he invested $3700 at 5.6% intrest compounded quartly. when are the two investments worth the same (or has the smaller one alwreday surprassed the greater one)?
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! four years ago, johnny invested $4000 at 5.4% interest compounded annually.
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five years ago, he invested $3700 at 5.6% interest compounded quarterly.
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when are the two investments worth the same (or has the smaller one already surpassed the greater one)?
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Value of the $3700 investment after one year.
3700(1+0.056) = $3907
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Solve for "t":
3907(1+0.056)^t = 4000(1+0.054)^t
[1.056/1.054]^t = 4000/3907
1.001898^t = 1.02375
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t = log(1.02375)/log(1.001898)
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t = 12.38 years
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Same value 8 1/3 years from now.
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Cheers,
Stan H.
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