mgmat

[resilient]

A certain investment grows at an annual interest rate of 8%, compounded quarterly. Which of the following equations can be solved to find the number of years, x, that it would take for the investment to increase by a factor of 16?

a. 16 = (1.02)^x/4
b.2 = (1.02)^x
c.16 = (1.08)^4x
d.2 = (1.02)^x/4
e.1/16 = (1.02)^4x




qa isa


THis can be done by using the formula but its pretty time consuming and a lot of room for error. IS there an easier safer way to do this?

[ksh]

Hi risilient,

It seems simple just plug in the values

for a compounding prob, let P be the Principal that becomes 16P in this case.
16P=P(1+.08/4)^x4, where x= no. of years
This gives us
16=(1.02)^x4

[4meonly]

Hi risilient,

It seems simple just plug in the values

for a compounding prob, let P be the Principal that becomes 16P in this case.
16P=P(1+.08/4)^x4, where x= no. of years
This gives us
16=(1.02)^x4

But the answer is
a. 16 = (1.02)^x/4

Why x/4?

[4meonly]

OA is B