1.

In order to send your oldest child to law school when the time comes, you want to
accumulate $40,000 at the end of 18 years. Assuming that your savings account will pay
6% compounded annually, how much would you have to deposit if:
a. you want to deposit an amount annually at the end of each year?
b. you want to deposit one large lump sum today?
t
(1+i) −1
a) FV=C( )
i
18
(1.06) −1
40 000=C( )
0.06
C=1294.26
FV
b) PV= t
(1+i)
40 000
= 18
(1.06)
=14 013.75

2. The expected after-tax cash flow from an investment property that you are considering is
Year 1 $25,000
Year 2 $27,500
Year 3 $30,250
At the end of year 3 you expect to sell the property for $400,000. If the appropriate
discount rate is 12%, what is the most you should pay for this property?
FV
PV= t
(1+i)
25 000
PV1= 1 =22 321.43
(1.12)
27500
PV2= 2 =21 922.83
(1.12)
30250
PV3= 3 =21 531.35
(1.12)
400 000
PV4= 3 =284 712.10
(1.12)
PV=22 321.43 +21 922.83 + 21 531.35 + 284 712.10 = 350 487.71
3. An investment will pay $500 in three years, $700 in five years, and $1,000 in nine years. If
the opportunity rate is 6%, what is the present value of this investment?
FV
PV= t
(1+i)
500
PV3= =419.81
¿¿
700
PV5= 5 =523.08
(1.06)
1 000
PV9= 9 =591.90
(1.06)
PV=419.81 + 523.08 + 591.90 = 1 534.79

4. Suppose you are 40 years old and plan to retire in exactly 20 years. 21 years from now you
will need to withdraw $5,000 per year from a retirement fund to supplement your social
security payments. You expect to live to the age of 85. How much money should you
place in the retirement fund each year for the next 20 years to reach your retirement goal if
you can earn 12% interest per year from the fund?
85-60=25 years
1
1− t
PV=C( (1+i) )
i
1
1− 25
=5 000( (1+0.12) )
0.12
=39 215.70
t
(1+i) −1
FV=C( )
i
20
(1+0.12) −1
39 215.70=C( )
0.12
39 215.70=C (72.05244244)
C=544.27

5. You are planning to deposit $10,000 today into a bank account. Five years from today you
expect to withdraw $7,500. If the account pays 5% interest per year, how much will
remain in the account eight years from today? Round to the nearest dollar.
FV=10 000(1+0.05)5=12 762.82
 12 762.82-7 500=5 262.82
FV=5 262.82(1+0.05)3=6 092.37

6. You are considering purchasing common stock in AMZ Corporation. You anticipate that
the company will pay dividends of $5.00 per share next year and $7.50 per share in the
following year. You also believe that you can sell the common stock two years from now
for $30.00 per share. If you require a 14% rate of return on this investment, what is the
maximum price that you would be willing to pay for a share of AMZ common stock?
PV= $5.00 / (1.14)1 + ($7.50 + $30.00) / (1.14)2
= $33.24

7. You have just purchased an investment that generates the cash flows that are shown below.
You are able to invest your money at 5.75%, compounded annually. How much is this
investment worth today?
Year Amount
0 0
1 1 250
2 1 585
3 1 750
4 2 225
5 3 450

F
PV= t
(1+i)
1250
PV1= 1 =1 182.03
(1.0575)
1585
PV2= 2 =1 417.32
(1.0575)
1750
PV3= 3 =1 479.78
(1.0575)
2 225
PV4= 4 =1 779.13
(1.0575)
3 450
PV5= 5 =2 608.66
(1.0575)
PV=1 182.03 + 1 417.32 + 1 479.78 + 1779.13 + 2 608.66 = 8 466.92

8. Assume that two investments have a three-year life and generate the cash flows shown
below. Which of the two would you prefer?
Year Investment A Investment B
1 $5,000 $8,000
2 $5,000 $5,000
3 $5,000 $2,000

A) Investment A, since it has the most even cash flows

B) Investment B, since it gives you the largest cash flows in earlier years
 C) Neither, since they both have equal lives
D) Both investments are equally attractive

9. You intend to purchase a new car upon graduation in two years. It will have a cost of
$29,371, including all extra features and sales tax. You just received a $3,000 pre-
graduation gift from your rich uncle that you intend to deposit in a money market account
that pays 6% interest, compounded monthly. If you use the amount in the money market
account for a down payment, and take out an auto loan for the remainder, how much will
you need to borrow?
0.06 / 12=0.005
N=2*12=24
FV = PV(1+i) nm
=3 000(1+0.05)2*12
=3 381.48
29 371 – 3 381.48 = 25 989.52
26 000

10. Your parents are planning to retire in Phoenix, AZ in 20 years. Currently, the typical house
that pleases your parents costs $200,000, but they expect inflation to increase the price of
the house at a rate of 4% over the next 20 years. To buy a house upon retirement, what
must they save each year in equal annual end-of-year deposits if they can earn 10%
annually?
FV=200 000(1+0.04)20=438 224.63
t
(1+i) −1
FV=C( )
i
20
(1+0.10) −1
438 224.63=C( )
0.10
C=7 651.24

11. You have just won a magazine sweepstakes and have a choice of three alternatives. You
can get $100,000 now, or $10,000 per year in perpetuity, or $50,000 now and $150,000 at
the end of 10 years. If the appropriate discount rate is 12%, which option should you
choose?
A) $100,000 now
B) $10,000 perpetuity
C) $50,000 now and $150,000 in 10 years

B) PV=C/r
10 000=C/0.12
C=1200
F
C) PV= t
(1+i)
 150 000
= 10
(1+0.12)
=48 295.99
50 000+48 295.99=98 295.99

12. Ronald Slump purchased a real estate investment with the following end-of-year cash
flows:
Year EOY Cash Flow
1 $200
2 $-350
3 $-430
4 $950
What is the present value of these cash flows if the appropriate discount rate is 20%?
F
PV= t
(1+i)
200
PV1= =166.67
( 1+ 0.2 )1
−350
PV2= 2 =-243.06
(1+0.2)
−430
PV3= 3 =-248.84
(1+0.2)
950
PV4= 4 =458.14
(1+0.2)
PV=166.67 – 243.06 – 248.84 + 458.14 = 132.91

13. As a part of your savings plan at work, you have been depositing $250 per quarter in a
savings account earning 8% interest compounded quarterly for the last 10 years. You will
retire in 15 years and want to increase your contribution each year from $1,000 to $2,000
per year, by increasing your contribution every four months from $250 to $500.
Additionally, you have just inherited $10,000, which you plan to invest now to earn
interest at 12% compounded annually for the next 15 years. How much money will you
have in savings when you retire 15 years from now?
First of all, let us calculate the amount accumulated by the
savings over the past 10 years. It will be $250 compounded at
2% (8/4=2%) quarterly. Which comes out to $250(1+2/100)4*10
for the first savings (as there are 4 quarters in a year). Add this
with for the second deposit $250(1+2/100)4*9. Similarly, for the
rest of 8 years we can calculate and then sum them up which
comes out to 15,301.33

Now let this money sit in the bank for another 15 years which
after 15 years becomes 15,301.33*(1+2/100)4*15 =$50,203.10
14. What is the present value of the following uneven stream of cash flows? Assume a 6%
discount rate and end-of-period payments. Round to the nearest whole dollar.

Year Cash Flow

1 $3,000
2 $4,000
3 $5,000
F
PV = t
(1+i)
3 000
PV1= 1 = 2 830.19
(1+0.06)
4 000
PV2 = 2 = 3 559.99
(1+0.06)
5 000
PV3 = 3 = 4 198.10
(1+0.06)
PV = 2 830.19 + 3 559.99 + 4 198.10 = 10 588.28

15. You want to travel to Europe to visit relatives when you graduate from college three years
from now. The trip is expected to cost a total of $10,000. Your parents have deposited
$5,000 for you in a CD paying 6% interest annually, maturing three years from now. Aunt
Hilda has agreed to finance the balance. If you are going to put Aunt Hilda's gift in an
investment earning 10% annually over the next three years, how much must she deposit
now so you can visit your relatives in three years?

FV = PV(1+i)t
= 5 000 (1+0.06)3
= 5 955.08
10 000-5 955.08 = 4 044.92
 FV
PV = t
(1+i)
4 044.92
= 3
(1+0.10)
= 3 039.00

16. You have been depositing money at the end of each year into an account drawing 8%
interest. What is the balance in the account at the end of year four if you deposited the
following amounts?
Year End of Year Deposit
1 $350
2 $500
3 $725
4 $400
FV = PV (1+i)t
FV = 350 (1+0.08)3 + 500 (1+0.08)2 + 725 (1+0.08)1 + 400 (1+0.08)0 = 2207.10

17. You are thinking of buying a miniature golf course. It is expected to generate cash flows of
$40,000 per year in years 1 through 4 and $50,000 per year in years 5 through 8. If the
appropriate discount rate is 10%, what is the present value of these cash flows?
F
PV = t
(1+i)
40 000 40 000 40 000 40 000 50 000 50 000
= 1 + 2 + 3 + 4 + 5 + 6+
(1+0.10) (1+0.10) (1+0.10) (1+0.10) (1+0.10) (1+0.10)
50 000 50 000
7 + 8
(1+0.10) (1+0.10)
= 235 047.66

18. Jay Coleman just graduated. He plans to work for five years and then leave for the
Australian "Outback" country. He figures that he can save $3,500 a year for the first three
years and $5,000 a year for the next two years. These savings will start one year from now.
In addition, his family gave him a $2,500 graduation gift. If he puts the gift, and the future
savings when they start, into an account that pays 7.75% compounded annually, what will
his financial "stake" be when he leaves for Australia five years from now? Round off to
the nearest $1.
FV = PV (1+i) t
= 3 500(1+0.0775)4 + 3 500(1+0.0775)3 + 3 500(1+0.0775)2 + 5 000(1+0.0775)1 + 5
000(1+0.0775)0 + 2 500(1+0.0775)5
= 23 135.74
19. Your grandmother is gifting you RM100 a month for four years while you attend college
to earn your bachelor's degree. At a 5.5 percent discount rate, what are these payments
worth to you on the day you enter college?
1
1− t
PV= C( (1+i) )
i
1
1− 4∗12
0.055
(1+ )
= 100 ( 12 )
0.055
12
= RM 4299.88

20. The Design Team just decided to save RM1,500 a month for the next 5 years as a safety
net for recessionary periods. The money will be set aside in a separate savings account
which pays 4.5 percent interest compounded monthly. The first deposit will be made
today. What would today's deposit amount have to be if the firm opted for one lump sum
deposit today that would yield the same amount of savings as the monthly deposits after 5
years
( 1+ i )t −1
PV = C[ ] (1+i)
i
1
1− 5∗12
0.045
(1+ ) 0.045
= 1500 [ 12 ] (1+ )
12
0.045
12
= RM 80 760.79

21. Alexa plans on saving RM3,000 a year and expects to earn an annual rate of 10.25 percent.
How much will she have in her account at the end of 45 years?
( 1+ i )t −1
FV=C [ ]
i
( 1+ 0.1025 )45−1
= 3000 [ ¿
0.1025
= RM 2 333 571.66

22. En. Johan plans to make a RM20,000 personal loan with UMW Bank. The bank will
charge him 4% above the Base Lending Rate, which currently is fixed at 6%. He wishes to
settle the loan installment in 5 years.
a. Determine the annual installment that En. Johan has to pay for the loan
 b. Construct an amortization schedule for the loan.
Year Beginning Interest Principal Total Payment/Annual Ending
balance payment payment Payment Balance
1 20 000.00 2 000.00 3 275.95 5 275.95 16 724.05
2 16 724.05 1 672.41 3 603.54 5 275.95 13 120.51
3 13 120.51 1 312.05 3 963.90 5 275.95 9 156.31
4 9 156.61 915.66 4 360.29 5 275.95 4 796.32
5 4 796.32 479.63 4 796.32 5 275.95 0.00

Interest =10%

23. You just won the grand prize in a national writing contest! As your prize, you will receive
$2,000 a month for ten years. If you can earn 7 percent on your money, what is this prize
worth to you today?
1
1−
PV = C[ (1+i)t ]
i
1
1− 10∗12
0.07
(1+ )
= 2000[ 12 ]
0.07
12
= RM 172 252.71

24. Phil can afford $180 a month for 5 years for a car loan. If the interest rate is 8.6 percent,
how much can he afford to borrow to purchase a car?
1
1−
PV = C[ (1+i)t ]
i
1
1− 5∗12
0.086
(1+ )
= 180 [ 12 ]
0.086
12
= RM 8 752.84
25. You are the beneficiary of a life insurance policy. The insurance company informs you
that you have two options for receiving the insurance proceeds. You can receive a lump
sum of $200,000 today or receive payments of $1,400 a month for 20 years. You can earn
6 percent on your money. Which option should you take and why?
1
1−
PV = C[ (1+i)t ]
i
1
1− 20∗12
0.06
(1+ )
= 1400 [ 12 ]
0.06
12
= RM 195 413.08
You should accept the $200,000 because the payments are only worth $195,413 to you
today

26. Your employer contributes $75 a week to your retirement plan. Assume that you work for
your employer for another 20 years and that the applicable discount rate is 7.5 percent.
Given these assumptions, what is this employee benefit worth to you today
1
1− t
PV = (1+i)
i
1
1− 20∗52
0.075
(1+ )
= 75 [ 52 ]
0.075
52
= RM 40 384.69

27. You need some money today and the only friend you have that has any is your miserly
friend. He agrees to loan you the money you need, if you make payments of $25 a month
for the next six months. In keeping with his reputation, he requires that the first payment
be paid today. He also charges you 1.5 percent interest per month. How much money are
you borrowing?
1
1−
PV = C[ (1+i)t ] (1+i)
i
1
1−
= 25 [ (1+0.015)6 ] (1+0.015)
0.015
= RM 144.57

28. You buy an annuity that will pay you $24,000 a year for 25 years. The payments are paid
on the first day of each year. What is the value of this annuity today if the discount rate is
8.5 percent?
 1
1−
PV = C [ (1+i)t ] (1+i)
i
1
1−
= 24000 [ (1+0.085)2 ] (1+0.085)
0.085
= RM 266 498.33

29. You are scheduled to receive annual payments of $4,800 for each of the next 7 years. The
discount rate is 8 percent. What is the difference in the present value if you receive these
payments at the beginning of each year rather than at the end of each year?
1
1−
PV = C[ (1+i)t ] (1+i)
i
1
1−
= 4800 [ (1+0.08)7 ] (1+0.08)
0.08
= RM 26 989.82
1
1−
PV = C[ (1+i)t ] (1+i)
i
1
1−
= 4800 [ (1+0.08)7 ]
0.08
= RM 24 990.58
DIFFERENCE = RM 26 989.82 – RM 24 990.58
= RM1 999.24
0.08 × $24,991 = $1,999

30. You are comparing two annuities with equal present values. The applicable discount rate is
8.75 percent. One annuity pays $5,000 on the first day of each year for 20 years. How
much does the second annuity pay each year for 20 years if it pays at the end of each year?
1
1−
PV = C[ (1+i)t ] (1+i)
i
1
1− 20
= 5000 [ (1+0.0875) ] (1+0.0875)
0.0875
= RM 50 533.56
1
1− 20
50533.56 = C[ (1+0.0875) ]
0.0875
 C=RM 5 437.50
$5,000 × (1 + 0.0875) = $5,438

31. Prescoft Bank offers you a five-year loan for $75,000 at annual interest rate of 6.8 percent.
What will your annual loan payment?
1
1−
PV = C[ (1+i)t ]
i
1
1−
75000 = C [ (1+0.068)5 ]
0.068
C= RM 18 193.96

32. You borrowed RM8,000 from a bank and promised to repay the loan in five equal annual
payments. The first payment is at end of the first year. The annual interest rate is 10%.
Write down the amortization schedule for this loan.

33. Trish receives $480 on the first of each month. Josh receives $480 on the last day of each
month. Both Trish and Josh will receive payments for next three years. At a 9.5 percent
discount rate, what is the difference in the present value of these two sets of payments?
Tish
1
1−
PV = C[ (1+i)t ] (1+i)
i
1
1− 3∗12
0.095
(1+ ) 0.095
= 480 [ 12 ] (1+ )
12
0.095
12
= RM 15 103.20

Josh
1
1− 3∗12
0.095
(1+ )
PV = 480[ 12 ]
0.095
12
= RM 14 984.57

DIFFERENCE = RM15 103.20 – RM14 984.57= RM118.63

34. What is the future value of $1,200 a year for 40 years at 8 percent interest? Assume annual
compounding.
t
(1+i) −1
FV = C[ ]
i
40
(1+0.08) −1
= 1200 [ ]
0.08
= RM 310 867.82

35. What is the future value of $15,000 a year for 30 years at 12 percent interest?
t
(1+i) −1
FV = C[ ]
i
30
(1+0.12) −1
= 15000 [ ]
0.12
= RM 3 619 990.27

36. Alexa plans on saving $3,000 a year and expects to earn an annual rate of 10.25 percent.
How much will she have in her account at the end of 45 years?
t
(1+i) −1
FV = C[ ]
i
45
(1+0.1025) −1
= 3000 [ ]
0.1025
= RM 2 333 571.66

37. Theresa adds $1,000 to her savings account on the first day of each year. Marcus adds
$1,000 to his savings account on the last day of each year. They both earn 6.5 percent
annual interest. What is the difference in their savings account balances at the end of 35
years?
Theresa
t
(1+i) −1
FV = C[ ] (1+i)
i
35
(1+0.065) −1
= 1000 [ ] (1+0.065)
0.065
= RM 132 096.95

Marcus
35
(1+0.065) −1
FV = 1000 [ ]
0.065
= RM 124 034.69

DIFFERENCE = RM 132 096.95 – RM 124 034.69 = RM 8 062.26

38. You are borrowing $17,800 to buy a car. The terms of the loan call for monthly payments
for 5 years at 8.6 percent interest. What is the amount of each payment?
 1
1−
PV = C[ (1+i)t ]
i
17 800 = C¿]
C = RM 366.05

39. You borrow $165,000 to buy a house. The mortgage rate is 7.5 percent and the loan period
is 30 years. Payments are made monthly. If you pay the mortgage according to the loan
agreement, how much total interest will you pay?
1
1− t
PV = C[ (1+i) ]
i
1
1− 30∗12
0.075
(1+ )
165000 = C [ 12 ]
0.075
12
C = RM 1 153.70
Total interest = (RM 1 153.70 *30*12) – RM 165 000 = RM 250 332

40. Holiday Tours (HT) has an employment contract with its newly hired CEO. The contract
requires a lump sum payment of $10.4 million be paid to the CEO upon the successful
completion of her first three years of service. HT wants to set aside an equal amount of
money at the end of each year to cover this anticipated cash outflow and will earn 5.65
percent on the funds. How much must HT set aside each year for this purpose?
( 1+ i )t −1
FV = C[ ]
i
( 1+ 0.0565 )3−1
10400000= C [ ]
0.0565
C= RM3 277 973.15

41. Nadine is retiring at age 62 and expects to live to age 85. On the day she retires, she has
$348,219 in her retirement savings account. She is somewhat conservative with her money
and expects to earn 6 percent during her retirement years. How much can she withdraw
from her retirement savings each month if she plans to spend her last penny on the
morning of her death?
1
1− t
PV = C[ (1+i) ]
i
1
1− 23∗12
0.06
(1+i )
348219 = C [ 12 ]
0.06
12
 C = RM 2 329.05

42. Kingston Development Corp. purchased a piece of property for $2.79 million. The firm
paid a down payment of 15 percent in cash and financed the balance. The loan terms
require monthly payments for 15 years at an annual percentage rate of 7.75 percent,
compounded monthly. What is the amount of each mortgage payment?
Amount financed = 2 790 000 * (1-0.15) = 2 371 500
1
1−
PV = C[ (1+i)t ]
i
1
1− 15∗12
0.0775
(1+ )
2 371 500 = C[ 12 ]
0.0775
12
C = RM 22 322.35

43. You estimate that you will owe $42,800 in student loans by the time you graduate. The
interest rate is 4.25 percent. If you want to have this debt paid in full within six years, how
much must you pay each month?
1
1−
PV = C[ (1+i)t ]
i
1
1− 12∗6
0.0425
(1+ )
42 800 = C [ 12 ]
0.0425
12
C = RM 674.50

44. You are buying a previously owned car today at a price of $3,500. You are paying $300
down in cash and financing the balance for 36 months at 8.5 percent. What is the amount
of each loan payment?
Amount financed = 3500=300=3200
1
1− t
PV = C[ (1+i) ]
i
1
1− 36
0.085
(1+ )
3200= C [ 12 ]
0.085
12
C = RM 101.02
45. Atlas Insurance wants to sell you an annuity which will pay you $3,400 per quarter for 25
years. You want to earn a minimum rate of return of 6.5 percent. What is the most you are
willing to pay as a lump sum today to buy this annuity?
1
1−
PV = C[ (1+i)t ]
i
1
1− 25∗4
0.065
(1+ )
= 3400 [ 4 ]
0.065
4
= RM 167 489.11

46. Your car dealer is willing to lease you a new car for $245 a month for 48 months.
Payments are due on the first day of each month starting with the day you sign the lease
contract. If your cost of money is 6.5 percent, what is the current value of the lease?
1
1−
PV = C[ (1+i)t ] (1+i)
i
1
1− 48
0.065
(1+ ) 0.065
= 245 [ 12 ] (1+ )
12
0.065
12
= RM 10 386.99

47. Your great aunt left you an inheritance in the form of a trust. The trust agreement states
that you are to receive $3,600 on the first day of each year, starting immediately and
continuing for 20 years. What is the value of this inheritance today if the applicable
discount rate is 6.75 percent?
1
1−
PV = C[ (1+i)t ] (1+i)
i
1
1−
= 3600 [ (1+0.0675)20 ] (1+0.0675)
0.0675
= RM 41 516.01

48. Samuelson Engines wants to save $750,000 to buy some new equipment six years from
now. The plan is to set aside an equal amount of money on the first day of each quarter
starting today. The firm can earn 4.75 percent on its savings. How much does the firm
have to save each quarter to achieve its goal?
t
(1+i) −1
FV = C[ ] (1+i)
i
 6∗4
0.0475
(1+ ) −1
4 0.0475
750 000 = C [ ] (1+ )
0.0475 4
4
C = RM 26 872.94

49. Stephanie is going to contribute $300 on the first of each month, starting today, to her
retirement account. Her employer will provide a 50 percent match. In other words, her
employer will contribute 50 percent of the amount Stephanie saves. If both Stephanie and
her employer continue to do this and she can earn a monthly rate of 0.90 percent, how
much will she have in her retirement account 35 years from now?
t
(1+i) −1
FV = C[ ] (1+i)
i
35∗12
(1+0.009) −1
= (300*1.50) [ ] (1+0.009)
0.009
= RM 2 123 006.69

50. You are considering an annuity which costs $160,000 today. The annuity pays $18,126 a
year at an annual interest rate of 7.50 percent. What is the length of the annuity time
period?
1
1−
PV = C[ (1+i)t ]
i
1
1− t
160 000 = 18126 (1+0.075)
0.075
1
1− t
160 000/18126 = (1. .075)
0.075
1
160 000/18126*0.075 = 1 –
( 1.075 )t
1
1- (160 000/18126*0.075) =
( 1.075 )t
1 – (160 000/18126*0.075) = (1.075)t
T= -In [1-(160 000/18126*0.075) / In (1.075)
= 14.99

51. Today, you borrowed $6,200 on your credit card to purchase some furniture. The interest
rate is 14.9 percent, compounded monthly. How long will it take you to pay off this debt
assuming that you do not charge anything else and make regular monthly payments of
$120?
1
1−
PV = C[ (1+i)t ]
i
 1
1− t
0.149
(1+ )
6200 = 120 [ 12 ]
0.149
12
1
1− t
0.149
(1+ )
6200/120 = 12
0.149
12
1
0.149 t
6200/120* =1- 0.149
12 (1+ )
12
1
0.149 t
1 – (6200/120* )= 0.149
12 (1+ )
12
0.149 0.149 t
1- (6200/120* ) = (1+ )
12 12
0.149 0.149
T= -In (6200/120* ) / In (1+ )
12 12
= 83.14 months = 6.93 years

52. Meadow Brook Manor would like to buy some additional land and build a new assisted
living center. The anticipated total cost is $23.6 million. The CEO of the firm is quite
conservative and will only do this when the company has sufficient funds to pay cash for
the entire construction project. Management has decided to save $1.2 million a quarter for
this purpose. The firm earns 6.25 percent, compounded quarterly, on the funds it saves.
How long does the company have to wait before expanding its operations?
t
(1+i) −1
FV= C[ ]
i
t
0.0625
(1+ ) −1
4
23600000 = 1200000 [ ]
0.0625
4
t
0.0625
(1+ ) −1
4
19.6667=
0.0625
4
0.0625 t
19.6667*0.015625 = (1+ ) -1
4
0.0625 t
0.3073 + 1 = (1 + )
4
T= -In 1.3073 / In (1.015625)
= 17.2833
= 4.32 years