Question

Greg deposited $4000 into an account with a 9.8% annual interest rate, compounded semiannually. Assuming that no withdrawals are made, how long will it
take for the investment to grow to $4616?
Do not round any intermediate computations, and round your answer to the nearest hundredth.

Answer 1

The number of years it would take $4000 to grow to $4616 is 2.92 years.

How many years would it take the investment to have a value of $4616?

When an amount earns compound interest compounded semi annually, it means that both the amount invested and the interest accrued increases in value twice yearly.

Number of years = (In FV / PV) / r

• r = 9.8/2 = 4.90%
• FV = future value = 4616
• PV = present value = 4000

(In 4616 / 4000) / 0.049 = 2.92 years