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18 August, 13:56

Rick puts $6500 in a high interest money market account at 4.36% annual interest

compounded monthly. Assuming he makes no deposit or withdrawals, how long will it

take for his investment to grow to $7000?

A. 2 years

B. 7.1 years

C. 1.6 years

D. 1.7 years

E. None of them

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Answers (1)
  1. 18 August, 14:24
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    D. 1.7 years

    Step-by-step explanation:

    7000 = 6500 (1 + 4.36%/12) ^t

    Where t is the no. of months

    7000/6500 = (1.003633333) ^t

    Apply ln both sides

    ln (14/13) = t ln (1.0109)

    t = 20.43372117 months

    Divide by 12 for no. of years

    1.702810098 years
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