Answer to Question #163139 in Financial Math for Adam sulemana

Question

An amount of $100,000 is invested at an annual interest rate of 6.25%. If the interest is
calculated yearly, how long would it be before the investment reached $150, 000? What
is the answer if the interest is paid monthly?.

Answer 1

If the interest is calculated yearly, then:

$100,000×1.0625^x = 150,000,$

$\log(1. 0625) 1.5 = 6.69$

years.

If the interest is paid monthly, then:

$100,000×(1 + 0.0625/12)^{12x} = 150,000,$

$\log(1.0052) 1.5/12 = 6.51$ years.