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m90210
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How many years (to two decimal places) will it take $5,000 to grow to $7,500 if invested at 8% compounded semiannually? Compounded continuously? Thank you!
The formula for calculating compound interest is A = P(1 + r/n)^(nt), where A is the final amount, P is the principal amount, r is the annual interest rate, n is the number of times the interest is compounded per year, and t is the number of years.
To calculate ROI, you need to subtract the initial investment from the final value, then divide the result by the initial investment. Finally, multiply the answer by 100 to get the percentage. The formula is (Final Value - Initial Investment) / Initial Investment * 100.
Simple interest is calculated on the initial principal amount only, while compound interest is calculated on the initial principal amount plus any accumulated interest. This means that compound interest will yield higher returns over time compared to simple interest.
The Rule of 72 is a quick way to estimate the number of years it takes for an investment to double given a fixed annual interest rate. To use it, divide 72 by the annual interest rate. The result will be the approximate number of years it takes for the investment to double.
To factor in inflation, you can use the real interest rate instead of the nominal interest rate. The real interest rate is the nominal interest rate minus the inflation rate. This will give you a more accurate estimate of the investment's actual returns.