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Find the time required for an investment of 5000 dollars to grow to 8800 dollars at an interest rate of 7.5 percent per year, compounded quarterly. Your answer is t= years. You may enter the exact value or round to 2 decimal places.

Solution

F in d t h e t im e re q u i re d f or an in v es t m e n t o f 5000 d o ll a rs t o g ro w t o 8800 d o ll a rs a t an in t eres t r a t e o f 7.5 p erce n t p er ye a r, co m p o u n d e d q u a r t er l y . Y o u r an s w er i s t = ye a rs . Y o u ma y e n t er t h e e x a c t v a l u e or ro u n d t o 2 d ec ima l pl a ces .

Time : 7.61

Solution steps

Translate the problem into an equation:

8800 = 5000 (1 + \frac{0.075}{4})^{4 t}

Solve for

t, 8800 = 5000 (1 + \frac{0.075}{4})^{4 t} : t = 7.60796 \dots

Time : 7.60796 \dots

Round

7.60796 \dots

to the nearest 2 decimal places:

7.61

Time : 7.61