Alex has 6000 dollars to invest. He would like to know how long it will take for him to have $10,000 if he invests in an account earning 7% interest compounded quarterly.

Answer 1

If P = monies over time, P_o = initial investment, t = time in years, n = number of periods, I = yearly interest rate, then using the traditional formula for compound interest, we have

P = P_o(1 + I/n)^(nt) Since there are 4 periods in a year, we have

10,000 = 6000(1 + .07/4)^(4t) = 6000(1.0175)^(4t)

Solving for t using logarithms, we find that t = 7.36 years