(Advanced analysis)Indy has $2,000 invested in a financial asset earning an annually compounded interest rate of 6 percent.Approximately how many years will it take before Indy's investment is worth $5,000?
A) 25.
B) 10.5.
C) 12.8.
D) 15.7.

Question

Quizplus · Accepted Answer

The formula for compound interest is A = P(1 + r/n)^(nt), where A is the final amount, P is the principal (initial investment), r is the annual interest rate, n is the number of times per year that the interest is compounded, and t is the number of years. In this case, we have P = $2,000, r = 6%, n = 1 (since the interest is compounded annually), and A = $5,000. Solving for t, we get t = log(A/P)/(n*log(1 + r/n)) = log(5000/2000)/(1*log(1 + 0.06/1)) = 15.7 years (rounded to one decimal place).

(Advanced Analysis)Indy Has $2,000 Invested in a Financial Asset Earning