Question

david invest $10,000 in a CD that pays 8% compounded quarterly. how long will it take his investment to double/

Answer 1

Answer:  

Number of year = 34.74 year (Approx.)  

Step-by-step explanation:  

Given:  

Amount invested = $10,000  

Interest rate = 8% (compounded quarterly)  

Future value = 2 x Amount invested

Find:  

Number of year  

Commutation:  

Future value = 2 x Amount invested  

Future value = 2 x 10,000  

Future value = $20,000  

Number of year (quarterly) = 40  

Interest rate (Semi-annual) = 8% / 4 = 2%  

So.  

A = P[1+r]ⁿ

20,000 = 10,000[1+2%]⁴ⁿ  

2 = [1.02]⁴ⁿ  

n = 34.744 year  

Number of year = 34.74 year (Approx.)