Question

You plan to invest in bonds that pay 4.0%, compounded annually. If you invest $20,000 today, how many years will it take for your investment to grow to $30,000? *

A. 5.37.

B. 7.74.

C. 8.27.

D. 10.34.

E. None of the above.

Answer 1

We have the compound interest formula:

Where,
A = Amount at the end of the period
P = Principal amount invested
i = rate of interest in decimal form
n = number of years

Therefore,

Now, taking log₁₀ on both sides, we get:

Therefore, the answer is D.10.34 years.