Answered

You expect to receive $3,100 upon your graduation and will invest your windfall at an interest rate of .43 percent per quarter until the account is worth $4,750. How many years do you have to wait until you reach your target account value?

(A) 25.02 years
(B) 26.78 years
(C) 21.76 years
(D) 24.86 years
(E) 23.21 years

Answer :

Answer:

correct option is (D) 24.86 years

Explanation:

given data

present value = $3100

future value =  $4,750

interest rate = 0.43 % = 0.0043

solution

we get here time period that is express by future value formula that is

future value = present value × [tex](1+r)^{t}[/tex]  ....................1

put here value and we get

$4,750  = $3100  × [tex](1+0.0043)^{t}[/tex]  

1.5322 =   [tex](1.0043)^{t}[/tex]

take ln both side we get

ln (1.5322) = t × ln(1.0043)

0.4267 = t × 4.2907 × [tex]10^{-3}[/tex]  

t = 99.4476 quarters

so time in years will be

time = [tex]\frac{99.4476}{4}[/tex]    

time = 24.86 years

so correct option is (D) 24.86 years

Other Questions