In: Finance
How many years will it take for the balance left in a savings
account to increase from
2 of 2
$1,000 to $1,500 if interest is received at a nominal rate of 6%
compounded
semiannually throughout the period?
FV= PV*(1+r)^n | ||||
Where, | ||||
FV= Future Value | ||||
PV = Present Value | ||||
r = Interest rate =6%/2 =3% | ||||
n= periods in number = Six months | ||||
1500= $1000*( 1+0.03)^n | ||||
1500/1000 =1.03^n | ||||
1.5 =1.03^n | ||||
n =13.72 | ||||
Number of years = 13.72/2 | ||||
=8.86 years | ||||