Carcass wrote:
If money is invested at r percent interest, compounded annually, the amount of the investment will double in approximately \(\frac{70}{r}\) years. If Pat's parents invested $5,000 in a long-term bond that pays 8 percent interest, compounded annually, what will be the approximate total amount of the investment 18 years later, when Pat is ready for college?
(A) $20000
(B) $15000
(C) $12000
(D) $10000
(E) $9000
GIVEN: At r percent interest, the amount of the investment will double in approximately 70/r yearsSo, at
8 percent interest, the time for the investment to double = 70/
8 ≈
9So, the investment will double every
9 years
We can now create a growth table:
Initially, the investment is worth $5,000
After 9 years, the investment is worth $10,000
After 18 years, the investment is worth $20,000
Answer: A
Cheers,
Brent