Answer:
70 years
Explanation:
Amount, A= $250,000
Principal, P=$2500
Rate, R=$6.65 compounded quarterly. This means that in every 3 months of the year, the interest the principal yielded is added to the principal to become the new principal for every 3 months.
Formular:
Amount, A= P[1+(R/100×4)]^4t
Where P = principal
R = rate
t = number of years
The "4" in the formular shows that the interest is compounded "quarterly".
In this problem, we are looking for the number of years ( which is "t") it will take to save up to $250000.
Substituting the values:
250,000=2500[1+(6.65/100×4)]^4t
Dividing both sides by 2500,
We have:
100=[1+(6.65/100×4)]^4t
Simplifying the terms inside brackets, we have:
100=1.016625^4t
Find the value of t which when substituted in the expression will give 100. The value of t = 70.
Hence it will take 70 years to save $250000
