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How long will it take for a $5000 investment to grow to $7000 at an annual rate of 9%, compounded monthly? Assume that no withdrawals are made
How long will it take for a $5000 investment to grow to $7000 at an annual rate of 9%, compounded monthly? Assume that no withdrawals are made.
Do not round any intermediate computations, and round your answer to the nearest hundredth.
Expert Solution
We can calculate the number of payments period by using the following formula in excel:-
=nper(rate,pmt,-pv,fv)
Here,
Nper = Number of payments period (monthly)
Rate = 9%/12 = 0.75% (monthly)
Pmt = 0
PV = $5,000
FV = $7,000
Substituting the values in formula:
= nper(0.75%,0,-5000,7000)
= 45.03 months
Number of years = Nper / 12
= 45.03 / 12
= 3.75 years
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