Question

Lucy have $6400 if she invests $1200 at 15% interest compounded quarterly?

Answer 1

Answer:

  11.4 years

Step-by-step explanation:

We assume you want to know the time it takes for Lucy's investment of $1200 to have a value of $6400. The compound interest formula is good for finding that.

  FV = P(1 +r/n)^(nt)

for principal P invested at rate r per year for t years, compounded n times per year. We want to find t such that ...

  6400 = 1200(1 +0.15/4)^(4t)

  16/3 = 1.0375^(4t) . . . . divide by 1200

  log(16/3) = 4t·log(1.0375) . . . . take logarithms

  t = log(16/3)/(4·log(1.0375)) ≈ 11.4

It will take about 11.4 years for Lucy's investment value to be $6400.