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An investment compounds annually at an interest rate of 34.1% What is
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22 Jan 2021, 09:34
22 Jan 2021, 09:34
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An investment compounds annually at an interest rate of 34.1% What is the smallest investment period by which time the investment will more than triple in value?
A. 4
B. 5
C. 6
D. 7
E. 8
A. 4
B. 5
C. 6
D. 7
E. 8
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Re: An investment compounds annually at an interest rate of 34.1% What is
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22 Jan 2021, 09:43
22 Jan 2021, 09:43
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Carcass wrote:
An investment compounds annually at an interest rate of 34.1% What is the smallest investment period by which time the investment will more than triple in value?
A. 4
B. 5
C. 6
D. 7
E. 8
A. 4
B. 5
C. 6
D. 7
E. 8
We can use fractions to solve this question.
Each year, the investment increases 34.1%
This is very close to an increase of 1/3 (33.33%)
So, if the investment increases by 1/3 each year, then each year, we can find the value of the investment by multiplying last year's value by 4/3 (this represents a 1/3 increase)
So, let's say the initial investment is $1.
We want to determine how many years it takes the investment to be worth at least $3 (triple)
Year 0: $1
Year 1: ($1)(4/3) = $4/3
Year 2: ($1)(4/3)(4/3) = $16/9 (this is less than $3)
Year 3: ($1)(4/3)(4/3)(4/3) = $64/27 (this is less than $3)
Year 4: ($1)(4/3)(4/3)(4/3)(4/3) = $256/81 (this is more than $3)
So, it takes 4 years for the investment to more than triple in value.
Answer = A
Cheers,
Brent
An investment compounds annually at an interest rate of 34.1% What is
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24 Apr 2022, 17:08
24 Apr 2022, 17:08
GreenlightTestPrep wrote:
Carcass wrote:
An investment compounds annually at an interest rate of 34.1% What is the smallest investment period by which time the investment will more than triple in value?
A. 4
B. 5
C. 6
D. 7
E. 8
A. 4
B. 5
C. 6
D. 7
E. 8
We can use fractions to solve this question.
Each year, the investment increases 34.1%
This is very close to an increase of 1/3 (33.33%)
So, if the investment increases by 1/3 each year, then each year, we can find the value of the investment by multiplying last year's value by 4/3 (this represents a 1/3 increase)
So, let's say the initial investment is $1.
We want to determine how many years it takes the investment to be worth at least $3 (triple)
Year 0: $1
Year 1: ($1)(4/3) = $4/3
Year 2: ($1)(4/3)(4/3) = $16/9 (this is less than $3)
Year 3: ($1)(4/3)(4/3)(4/3) = $64/27 (this is less than $3)
Year 4: ($1)(4/3)(4/3)(4/3)(4/3) = $256/81 (this is more than $3)
So, it takes 4 years for the investment to more than triple in value.
Answer = A
Cheers,
Brent
Can we use 3= (1.341)^n and then calculate for n?
Is the technique you showed quicker one or the one i denoted is the quicker one?
Thanks in advance.
