You decide to put $2,000 in a savings account to save for a $3,000 downpayment on a new car. If the account has an interest rate
of 4% per year and is compounded monthly, how long does it take until you have $3,000 without depositing any additional funds? 121.862 years 12.1862 years 10.155 years 1.0155 years
1 answer:
Answer:
10.153 years
Step-by-step explanation:
The future value of such an investment is given by ...
FV = P·(1 +r/12)^(12t)
where P is the principal invested, FV is the future value of it, r is the annual interest rate, and t is the number of years.
Dividing by P and taking the log, we have ...
FV/P = (1 +r/12)^(12t)
log(FV/P) = 12t·log(1 +r/12)
Dividing by the coefficient of t gives ...
t = log(FV/P)/log(1 +r/12)/12 = log(3000/2000)/log(1 +.003333...)/12 ≈ 121.842/12
t ≈ 10.153 . . . years
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