1) How long will it take $10,000 to grow to $12,000 if the investment earns inte

Question

1)

How long will it take $10,000 to grow to $12,000 if the investment earns interest at the rate of 4%/year compounded monthly? (Round your answer to one decimal place.)

2)

Find the interest rate needed for an investment of $7,000 to quadruple in 5 years if interest is compounded continuously. (Round your answer to the nearest hundredth of a percentage point.)

3)

Bernie invested a sum of money 5 years ago in a savings account, which has since paid interest at the rate of 3%/year, compounded quarterly. His investment is now worth $17,574.81. How much did he originally invest? (Round your answer to the nearest cent.)

Explanation / Answer

1)

12000 = 10000 * ( 1 + ( (4/12)/100) )^( t)

1.2 = 1.00333^ t

t = 54.84 months

= 4 years 7 months

2)

A = Pe^( rt )

7000 * 4 = 7000 e^( r * 5)

e^( 5r) = 4

r = ln 4 / (5)

= 0.2772

= 27.72 %

3)

17574.81 = x * ( 1 + ((3/4)/100 )^(5 *4)

17574.81 = x * 1.1611

x = $ 10903.84

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