Question

A person invests 4000 dollars in a bank. The bank pays 5.75% interest compounded

Answer 1

The time required to get a total amount of $5,900.00 with compounded interest on a principal of $5,000.00 at an interest rate of 5.75% per year 2.899 years

Compound Interest

Given Data

• Principal P = $4000

• Rate r= 5.75%

• Final Amount A =  %5900

Calculation Steps:

First, convert R as a percent to r as a decimal

r = R/100

r = 5.75/100

r = 0.0575 per year,

Then, solve the equation for t

t = ln(A/P) / n[ln(1 + r/n)]

t = ln(5,900.00/5,000.00) / ( 4 × [ln(1 + 0.0575/4)] )

t = ln(5,900.00/5,000.00) / ( 4 × [ln(1 + 0.014375)] )

t = 2.899 years

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