SOLUTION: You have $2500 to invest at 6% interest compounded quarterly. For how many years will the money need to be invested for that amount to triple? Type your answer in decimal form, rou
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Question 1039193: You have $2500 to invest at 6% interest compounded quarterly. For how many years will the money need to be invested for that amount to triple? Type your answer in decimal form, rounded to the nearest half year Answer by addingup(3677) (Show Source):
You can put this solution on YOUR website! So we have 4 periods per year, thus our rate per period will be 0.06/4 = 0.015
Our financial formula for interest is:
FV = PV(1+r/n)^nt But I simplified it in my opening line, so to make it easier we have:
7500 = 2500(1+0.015)^t Divide both sides by 2500
7500/2500 = 1.015^t To get rid of the exponent we have to use logs:
t = ln(7500/2500)/ln1.015
t = 1.099/0.01489 = 73.81 periods and since we want years (each period is 1 quarter): 73.81/4= 18.45 years
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Check:
Amount = 2500(1+0.06/4)^4*18.45
= 2500*3.000 = 7500 I have the correct answer.
Run the numbers in your calculator to get familiar with the process.
John
