Question

A person invests 3500 dollars in a bank. The bank pays 4.75% interest compounded

Answer 1

9514 1404 393

Answer:

  10.7 years

Step-by-step explanation:

The formula for the balance in an account earning compound interest is ...

  A = P(1 +r/n)^(nt)

where principal P is invested at annual rate r compounded n times per year for t years. We want to solve for t.

  5800 = 3500(1 +0.0475/4)^(4t)

  58/35 = 1.011875^(4t) . . .  divide by 3500 and simplify a bit

  log(58/35) = 4t·log(1.011875) . . . . take logs

  t = log(58/35)/(4·log(1.011875)) . . . . divide by the coefficient of t

  t ≈ 10.6966 ≈ 10.7

The person must leave the money n the bank for about 10.7 years for it to reach $5800.