Question

Question 5 (25 points)If $5000 is invested in a savings account with an annual interest rate of 7%compounded quarterly, how long would it take for the amount to grow to $8000?06.714 years6.734 years06.773 years7.013 years07.130 years

Answer 1

Given an initial quantity , how much time it takes to obtain an amount, by compound interest

the time expected is t in the formula

5000 (( 1+ 7/100) ^ t = 8000

then

( 1+ 7/100) ^t = (8000/5000) = 8/5

then

( 1 + 0.07) ^ 7.013 = 1.60 = 8/5

then the right answer is 7.013 years