SOLUTION: I have $1,800 to invest. I would like to have $2,340. If I invest in a CD at a 5% interest rate how many years would it take to get $2,340?
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Question 434424: I have $1,800 to invest. I would like to have $2,340. If I invest in a CD at a 5% interest rate how many years would it take to get $2,340?
Answer by solver91311(24713) (Show Source): You can put this solution on YOUR website!
It depends on how often the interest is compounded.
^{nt})
A is the future amount -- for your problem $2340.
P is the present amount -- for your problem $1800.
r is given as 5% which is to say 0.05.
^{nt}\ =\ \frac{2340}{1800}\ =\ 1.3)
^{nt}\ =\ \ln(1.3))
\ =\ \ln(1.3))
}{n\cdot\ln\left(1\ +\ \frac{r}{n}\right))
So now all you have to do is decided how often to compound, plug in an appropriate value for n and then do the arithmetic. Use your calculator.
Annual compounding: n = 1, Semi-annual, n = 2, quarterly, n = 4, monthly, n = 12, and so on.
UNLESS you want to compound continuously, then
so
}{0.05})
The fastest you can get there is 5 years 3 months, give or take a day or two.
John
My calculator said it, I believe it, that settles it
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