Question

Find how many years it would take for an investment of $3700 to grow to $6000 at an annual interest rate of 6.2% compounded semi-annually.

Answer 1

Answer:

  7 years 11 months

Step-by-step explanation:

The future value formula for the value of a principal P invested at annual rate r compounded n times yearly for t years is ...

  FV = P(1 +r/n)^(nt)

For the given numbers, we want to find t:

  6000 = 3700(1 +.062/2)^(2t)

Dividing by 3700 and taking the logarithm, we get ...

  6000/3700 = 1.031^(2t)

  log(60/37) = 2t·log(1.031)

Dividing by the coefficient of t gives ...

  t = log(60/37)/(2log(1.031)) ≈ 7.92 . . . . . years

It will take about 7 years 11 months for the investment to grow to $6000.