Your bank pays 4% annual interest compounded quarterly on January 1, April 1, July 1, and October 1. You deposited $840 on April
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Answer:
Step-by-step explanation:
Since we have an amount in the future of 750, we are going to use Future value formula; FV = PV (1+r)^t
where PV= Initial amount deposited
r= interest rate or discount rate
t = total duration of the investment
FV= 750
PV=500
r = 2.5% or 0.025 as a decimal
t = ?
Next, plug in the numbers into the formula;
750 = 500* (1+0.025)^t
divide both sides by 500;
750/500 = 1.025^t
Introduce <em>ln</em> on both sides
ln 1.5 = ln
ln 1.5 = t ln 1.025
0.4054651 = 0.0246926 t
Divide both sides by 0.0246926 to solve for t;
0.4054651/0.0246926 = t
t = 16.42
Therefore it will take 16.42 years