1. Jill is going to invest $20,000 at 9% per annum compunding monthly. a.) Calculate the...

1. Jill is going to invest $20,000 at 9% per annum compunding monthly.

a.) Calculate the value of the investment at the end of 6 years.

b.) How long will she need to leave the money in this account for the balance to be twice the original investment?

c.) Jill would really like to double her investment in 5 years. What interest rate would she need to do this?

Expert Solution

(a ): Value of $20,000 at the end of 6 years= $34,251.05 as follows:

(b): Number of months required to double the amount with 9% interest compounded monthly is the value of ‘n’ in the following formula:

$40,000 = $20,000*(1+9%/12)^n

1.0075^n=40,000/20,000 =2

n= 92.76582749 as follows:

Therefore, time required for the amount to be twice the amount of investment= 92.765827 months or 7 years and 8.77 months.

(c ): Interest rate required= 13.943328% as follows:

jeff jeffy answered 1 year ago

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