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Popular Word Problems >

Find the time required for an investment of 5000 dollars to grow to 6000 dollars at an interest rate of 7.5 percent per year, compounded quarterly. Round your answer to two decimal places.

Solution

solve for

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 6000 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 . R o u n d yo u r an s w er t o tw o d ec ima l pl a ces .

Solution

Time : 2.45

Solution steps

Translate the problem into an equation:

6000 = 5000 (1 + \frac{0.075}{4})^{4 t}

Solve for

t, 6000 = 5000 (1 + \frac{0.075}{4})^{4 t} : t = 2.45367 \dots

Time : 2.45367 \dots

Round

2.45367 \dots

to the nearest 2 decimal places:

2.45

Time : 2.45

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