Question

Suppose $5,000 is invested in a quarterly compounding account at 6%. Approximately how long will it take for the account to reach $6,750?

Answer 1

what does it mean to compound quarterly?

Answer 2

It means the interest is calculated and added to the account.

Answer 3

So after n quarters, the principle, P at an annual rate r has grown to

P(1+r/4)^n

Answer 4

So use this formula for your P and r and solve for n.

Answer 5

is some cases this would also be formulated as:
\[A=P(1+\frac{r}{n})^{nt}\]

Answer 6

n represents the (n)umber of times a year that the interest is compounded; and t is the number of years that go by