Problem By the conditions of a will, the sum of P2.5M is left to a girl to be held in a trust fund by her guardian until it amounts to P4.5M. When will the girl receive the money if the fund is invested at 8% compounded quarterly?

Answer Key

Solution

$4.5 = 2.5\left(1 + \dfrac{0.08}{4} \right)^{4t}$

$1.8 = 1.02^{4t}$

$\ln 1.8 = \ln 1.02^{4t}$

$\ln 1.8 = 4t \ln 1.02$

$t = \dfrac{\ln 1.8}{4 \ln 1.02}$

$t = 7.42 ~ \text{years}$ ← answer

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