How many years will it take to grow 675 to 1350 if the discount rate is...

Question

Question

How many years will it take to grow 675 to 1350 if the discount rate is i = 12% quarterly?

business finance

Answer 1

Answer #1

We use the formula:
A=P(1+r/4)^4n
where
A=future value
P=present value
r=rate of interest
n=time period.

1350=675*(1+0.12/4)^4n

(1350/675)=(1.03)^4n

Taking log on both sides;

log 2=4n*log 1.03

n=1/4[log 2/log 1.03]

which is equal to

=5.86 years(Approx).

Answer 2

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