Question

A person invest $1800 in a account that earns 2.46% annual interest. Find when the value of the investment teachers $3500

Answer 1

Answer:

28 years

Step-by-step explanation:

To find the number of years that the investment will reach $3500, we can use the formula of compound interest:

P = Po * (1+r)^t

where P is the final value, Po is the inicial value, r is the annual interest and t is the time in years.

In this question, P = 3500, Po = 1800 and r = 2.46% = 0.0246, so:

3500 = 1800 * (1+0.0246)^t

1.0246^t = 3500/1800

1.0246^t = 1.9444

Using logarithm in both sides:

log(1.0246^t) = log(1.9444)

t*log(1.0246) = 0.2888

t * 0.0106 = 0.2888

t = 0.2888 / 0.0106 = 27.2453 years

So the investment will reach $3500 after 28 years (rounding the result up, because after 27 years the investment will not reach $3500)