SOLUTION: Can someone help me with this word problem please.. Using the compound interest formula A + P(1 + i)^(n), where P is the original value of an investment, I is the interest rate pe

Question 206755: Can someone help me with this word problem please..
Using the compound interest formula A + P(1 + i)^(n), where P is the original value of an investment, I is the interest rate per compounding period, n is the total number of compounding periods, and A is the value of the investment after n periods.
To save for college tuition, the parents of a preschooler invest $5000 in a bond fun that earns 6% annual interest compounded monthly. In approximately how many years will the investment be worth $15000?
Thank you!
Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
To save for college tuition, the parents of a preschooler invest $5000 in a bond fun that earns 6% annual interest compounded monthly. In approximately how many years will the investment be worth $15000?
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Correct Formula: A(t) = P(1+(r/n))^(nt)
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15000 = 5000*(1+(0.06/12))^(12t)
3 = (1+ 0.005)^(12t)
Take the log of both sides to get:
12t*log(1.005) = log(3)
12t = [log(3)]/[log(1.005)]
12t = 220.2713
t = 18.36 years
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Cheers,
Stan H.
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