You have $2500 to invest at 6% interest compounded quarterly. for how many years will the money need to be invested for that amount to triple? a=p[1 + (r/n) ]n/y

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Izayah

Business

3 April, 11:13

You have $2500 to invest at 6% interest compounded quarterly. for how many years will the money need to be invested for that amount to triple? a=p[1 + (r/n) ]n/y

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Gaige Chang · Answer 1

To determine the number of years needed, we use theories and formula from economics. The future amount should be triple the original amount and this would be 2500 (3) = 7500 dollars. The interest rate is compounding so we use formula for compounding interest rate. We do as follows:

F = P (1 + i) ^n

where F is the future amount, P is present value, i is the effective interest rate, n is the number of compounding periods

We need to convert the interest to per year.

i = (1 + r/m) ^m - 1 = 0.061208 = 6.12% per year

F = P (1 + i) ^n

7500 = 2500 (1 +.0612) ^n

n = 18.50 or 19 years