7. How many years will it take for $197,000 to grow to be $554,000 if it is invested in an account with a quoted annual interest rate of 8% with monthly compounding of interest?
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Explanation:
7. i = 0.666667 (8% annually divided by 12 comp. periods per year) PV = -197000
FV = 554000
solve for n (answer on calculator = 155.61)
Since the interest rate was entered as a monthly rate, the answer for n is in months. The number of years equals the number of months divided by twelve.
Number of years = (155.61)/12 = 12.97 years
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