Question

You have just received $175,000 from the estate of a long-lost rich uncle. If you invest all your inheritance in a tax-free bond fund earning 6.6% compounded quarterly, how long do you have to wait to become a millionaire? (Round your answer to two decimal places.)

Answer 1

Compound Interest Formula:

Here

A = Amount = 1,000,000

P = 175,000

r = 0.066

n = 4

t = to be found

Substituting, we get:

So,

we get:

i.e.,

i.e.,

Taking logarithm on both sides, we get:

i.e.,

i.e.,

So,

t = 100.3950/4

= 25.0988

So,

Answer is:

25.10 years