How long in years will it take for a mutual fund investment of $25,000 to reach $250,000 if the fund pays 12% per year?
A)20.3178 years
B)2)03178 years
C)10.65 years
D)The time cannot be determined with information provided.

Question

Quizplus · Accepted Answer

We can use the formula for compound interest: 
A = P(1 + r/n)^(nt) 
Where A is the final amount, P is the initial investment, r is the interest rate (as a decimal), n is the number of times interest is compounded per year, and t is the number of years. 
Plugging in the values: 
$250,000 = $25,000(1 + 0.12/1)^(1t) 
Simplifying: 
10 = (1.12)^t 
Taking the logarithm of both sides: 
log(10) = t*log(1.12) 
t = log(10) / log(1.12) 
t ≈ 20.3178 
Therefore, it will take approximately 20.3178 years for the investment to reach $250,000. Therefore, the answer is (A) 20.3178 years.

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