SOLUTION: About how many years will it take for $1,800 to reach $2,500 at a simple interest rate of 4%

Question 538590: About how many years will it take for $1,800 to reach $2,500 at a simple interest rate of 4%
Answer by jpg7n16(66) (Show Source): You can put this solution on YOUR website!
For this problem, we are dealing with the compounding of an investment. The formula for compounding an investment is:

'P' is initial principal; 'i' is interest rate in the compounding period; 'n' is the number of compounding periods; and 'x' is the final amount of the investment. So we should start looking for the pieces of the puzzle that we know. From the question:
;; and
The only piece we don't know is "n" - so that's what we'll be solving for. Plug what we do know into the equation.

Now we start taking things away to leave "n" by itself. Start with 1800.

Which leaves us with

The tricky part is, how do you get that exponent down?? The answer: take the natural log of both sides. (Since )

Now you have something you can work with. Just divide by anything that's not 'n'

You will reach $2,500 in approx. 8.375 years.
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