Question

Carlos deposited $7,924 into a savings account 30 years ago. The account has an interest rate of 4.6% and the balance is currently $30,541.83. How often does the interest compound?

Answer 1

Answer:

n = 1, this means the interest compounds ANNUALLY.

Step-by-step explanation:

Carlos deposited $7,924 into a savings account 30 years ago. The account has an interest rate of 4.6% and the balance is currently $30,541.83. How often does the interest compound?

Compound Interest Formula

: A = P(1 + r/n)^nt

A = Amount after time t

P = Principal (Initial Amount Invested)

r = Interest rate

n = Number of times the interest is compounded

t = time in years

A = $30,541.83

r = 4.6% = 0.046

t = 30

P = $7,924

Hence,

$30,541.83 = $7924(1 + 0.046/n)^30n

Divide both sides by 7924

$30,541.93/$7924 = (1 + 0.046/n)^30n

$30,541.93/$7924 = (n + 0.046/n)^30n

3.8543576477 = (n + 0.046/n)^30n

We take the logarithm of both sides

log 3.8543576477 = log (n + 0.046/n)^30n

Solving for n,

n = 1

Therefore, from the calculation above, since n = 1, this means the interest compounds ANNUALLY.