Solve the problem.
-You just put $\$ 1147$ in a CD that is expected to earn $5 \%$ compounded quarterly, and $\$ 8377$ in a savings account that is expected to earn $2 \%$ compounded semiannually. Determine when, to the nearest year, the values of your two investments will be the same.
A) 87 years
B) 47 years
C) 67 years
D) 27 years

Question

Quizplus · Accepted Answer

To find when the two investments will be equal, use the compound interest formula for both: $ A = P(1 + \frac{r}{n})^{nt} $. For the CD: $ A = 1147(1 + \frac{0.05}{4})^{4t} $. For the savings account: $ A = 8377(1 + \frac{0.02}{2})^{2t} $. Set them equal and solve for $ t $. The calculations show they are equal at approximately 67 years.

Solve the Problem $1147\$ 1147$1147 In a CD That Is Expected to Earn

Solve the Problem $\$ 1147$ In a CD That Is Expected to Earn