Question

Michael invests USD 20 000 at 9.6% p.a. compounded monthly.

Answer 1

Given :

A = 25000

P = 20000

r % = 9.6 % = 0.096

n = 12

To Find :

The time taken say t.

Solution :

We know, compound interest is given by :

$A=P(1+\dfrac{r}{n})^{n.t}$

Taking log both sides :

$A=P(1+\dfrac{r}{n})^{n.t}\\\\log\ \dfrac{A}{P}= n.t\times log( 1+\dfrac{r}{n})\\\\t =\dfrac{1}{n}\times \dfrac{log\ \dfrac{A}{P}}{log(1+\dfrac{r}{n})}\\\\\\t=\dfrac{1}{12}\times \dfrac{log\ \dfrac{25000}{20000}}{log(1+\dfrac{0.096}{12})}\\\\\\t=2.33\ years$

Hence, this is the required solution.