Question

A person invests $2,740 in an account that earns 4.3% annual interest. Find when the value of the investment reaches $7,000. If necessary, round to the nearest tenth. the investment will reach $7,000 in approximatelyyears.

Answer 1

So, to set up your equation is the hardest part. If you remember the basic format, you're set.

I(t) = P * (1+r%)^t

t= time and this will be our variable

Initial amount P = $2740

Rate = 4.3% which converts numerically into .043

I(t) = 7000

Before we get to find out how to find how many years it takes to get to $7000, set up the basic equation by plugging in what we know.

I(t) = $2740(1+4.3%)^t

I(t)=2740(1.043)^t

Now plug in for $7000 for I(t)

7000=2740(1.043)^t                 Divide both sides by 2740

7000/2740 = 2740/2740(1.043)^t

2.55474453=(1.043)^t

Now you can solve for t in two ways. You can either use the natural log or graph it on your graphing calculate and see when the two equations meet.

In your calculator you can set up:

ln(2.55474453)/ln(1.043) = t                 which is the method I prefer since it's much simpler

t=22.278528

but you can also graph it in your ti-84

with

y1=2.55474453

y2=(1.043)^x

and find where they intersect on the graph.

either way it'll be the same answer