Carlos needs 4300 for a future project. He can invest 2000 now at an annual rate of 10% , compounded quarterly. Assuming that no withdrawals are made, how long will it take for him to have enough money for his project?

Solution

C a r l os n ee d s 4300 f or a f u t u re p ro j ec t . He c an in v es t 2000 n o w a t an ann u a l r a t e o f 10%, co m p o u n d e d q u a r t er l y . A ss u min g t ha t n o w i t h d r a w a l s a re ma d e, h o w l o n g w i ll i t t ak e f or him t o ha v e e n o ug h m o n ey f or hi s p ro j ec t ?

Time : 7.75

Solution steps

Translate the problem into an equation:

4300 = 2000 (1 + \frac{0.1}{4})^{4 t}

Solve for

t, 4300 = 2000 (1 + \frac{0.1}{4})^{4 t} : t = 7.75

Time : 7.75