Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 27P
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Question
Find the time required for an investment of 5000 dollars to grow to 6300 dollars at an interest rate of 6.4 percent compounded monthly.
Expert Solution
Step 1 Formula and Basic Details
1. Future Value = Present Value * (1 + Interest per Compounding Period)^# of Periods
Investment = Present Value = $5000
Future Value = $6300
Interest Rate per Compounding period = Interest rate / 12 = 6.40%/12 = 0.533%
2. Log (an) = n * Log (a)
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