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Investment Time and Interest Rate

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1. Find t to the nearest hundredth if $1786 becomes $2063 at 2.6%, with interest compounded monthly.

2. At what interest rate, to the nearest hundredth of a percent, will $16,000 grow to $20,000 if invested for 5.25 yr and interest is compounded quarterly?

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Solution Summary

This solution contains step-by-step calculations to determine the investment time and interest rate of investment scenarios.

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1. We shall use the formula

A = P (1+r/n)^(n*t)

where A is the final amount ($2063), P is the initial investment ($1786), r is the interest rate (2.6/100 = 0.026), n is the number of times the interest is compounded each year (12 - monthly), and t is the number of years.

Thus, using these values:

2063 = 1786 * (1+.026/12)^(12*t)

Dividing ...

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