Question

Two investments are made at the same time. The first consists of investing 1480 dollars at a nominal rate of interest of 7.7 percent convertible semiannually. The second consists of investing 1300 dollars at a nominal rate of interest of 7.7 percent convertible daily. How long will it take for the two investments to be worth exactly the same amount?

Answer 1

2.01yrs

Step-by-step explanation:

future value = present value * (1+r)^n

where r = interest rate per period

and n = number of periods

=>

1480 * (1+7.7%/2)^n = 1300 * (1+7.7%)^n

=>

n = 2.01 year