How long will it take for a \$7000 investment to grow to \$8344 at an annual rate of 4.8% , compounded monthly? Assume that no withdrawals are made.Do not round any intermediate computations, and round your answer to the nearest hundredth.

Solution

Ho w l o n g w i ll i t t ak e f or a $7000 in v es t m e n t t o g ro w t o $8344 a t an ann u a l r a t e o f 4.8%, co m p o u n d e d m o n t h l y ? A ss u m e t ha t n o w i t h d r a w a l s a re ma d e . Do n o t ro u n d an y in t er m e d ia t e co m p u t a t i o n s, an d ro u n d yo u r an s w er t o t h e n e a res t h u n d re d t h .

Time : 3.67

Solution steps

Translate the problem into an equation:

8344 = 7000 (1 + \frac{0.048}{12})^{12 t}

Solve for

t, 8344 = 7000 (1 + \frac{0.048}{12})^{12 t} : t = 3.67

Time : 3.67