Sampson, Inc. invested $1.325 million in a project that earned an 8.25% rate of return. Sampson sold their investment for $3,713,459. How much sooner could Sampson have sold the company if they only wanted $3 million from the project?
A) 2.69 years
B) 3.33 years
C) 5.17 years
D) 6.67 years
E) 10.31 years

Question

Quizplus · Accepted Answer

To find out how much sooner Sampson could have sold the company for $3 million instead of $3,713,459, we first calculate the number of years it took to reach both amounts using the formula for compound interest: A = P(1 + r)^t, where A is the amount, P is the principal, r is the rate, and t is the time in years.For $3,713,459:3,713,459 = 1,325,000(1 + 0.0825)^tSolving for t gives approximately 16.67 years.For $3,000,000:3,000,000 = 1,325,000(1 + 0.0825)^tSolving for t gives approximately 14 years.Subtracting the two times: 16.67 years - 14 years = 2.67 years.