Posted by **Branson** on Monday, May 23, 2011 at 4:06pm.

Henry invests $5,000 in a mutual fund with an annual interest rate of 7.5%. He also has a 4-yr, $10,000 loan at 3.75%. When will the amount of interest earned on the mutual fund be equal to the amount of interest paid on the loan?

- Math -
**Henry**, Monday, May 23, 2011 at 8:58pm
Loan: $10,000 @ 3.75% for 4 years.

Pt = (Po*r*t) / (1 - (1+r)^-t.

r = (3.75% / 12)/100% = 0.003125 =

monthly % rate express as a decimal.

t = 4yrs * 12mo/yr = 48mo.

Pt=(10,000*0.003125*48)/(1-(1.003125)^-48.

Pt = 10784.33.

Int. = 10,784.3 - 10000 = 784.33.

Investment: $5,000 @ 7.5%.

Int. = 5000 * 0.075t = 784.33,

375t = $784.33,

t = 2.09yrs = 25mo.

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