It takes 8 months for the investment to grow to $6000 if interest was compounded quarterly.
What is compound interest?
The interest charged on a loan as well as deposit is known as compound interest. It is the idea that we use the most frequently on a daily basis. Compound interest is calculated for an amount based on both the principal and cumulative interest. The main distinction between compound as well as simple interest is this.
Given:
Principal amount = $5000
Annual amount interest = 2.6%
Compounded quarterly = 4
Final amount = $7000
Formula:
A = P(1 + r)^4n - 1
A is the quarterly compounded interest.
P would be the principal amount.
r is the quarterly compounded rate of interest.
n is the number of periods.
Solving it:
7000 = 5000 (( 1 + 0.026))^ 4t -1
7/5 = (( 1 + 0.026))^ 4t
7/5 = (1.026)^ 4t -1
ln (7/5) = 4t ln (1.006) - ln 1
t = 7.61 months
t ~ 8months
Hence, it takes 8 months for the investment to grow to $6000 if interest was compounded quarterly.
To know more about compound interest check the below link:
https://brainly.com/question/24274034
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