Two investments are made at the same time. The first consists of investing 1480 dollars at a nominal rate of interest of 7.7 percent convertible semiannually. The second consists of investing 1300 dollars at a nominal rate of interest of 7.7 percent convertible daily. How long will it take for the two investments to be worth exactly the same amount?

Question

Immanuel

Business

14 October, 09:42

Two investments are made at the same time. The first consists of investing 1480 dollars at a nominal rate of interest of 7.7 percent convertible semiannually. The second consists of investing 1300 dollars at a nominal rate of interest of 7.7 percent convertible daily. How long will it take for the two investments to be worth exactly the same amount?

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Answers (1)

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Jose Carson · Answer 1

2.01yrs

Explanation:

future value = present value * (1+r) ^n

where r = interest rate per period

and n = number of periods

=>

1480 * (1+7.7%/2) ^n = 1300 * (1+7.7%) ^n

=>

n = 2.01 year