Question 523969: Odessa deposited $1,347.80 into a savings account with an interest rate of 3.3% compounded monthly. About how long will it take for the account to be worth $5,000?
Answer by lwsshak3(11628)   (Show Source):
You can put this solution on YOUR website! Odessa deposited $1,347.80 into a savings account with an interest rate of 3.3% compounded monthly. About how long will it take for the account to be worth $5,000?
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compound interest formula: A=P(1+i)^n, P=initial investment, i=interest rate per period, n=number of periods, A=amount after n-periods.
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For given problem:
initial investment=$1347.80
interest rate per period=.033/12=.00275
amount after n-periods=$5000
n=? periods(months)
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5000=1347.80(1+.00275)^n
5000/1347.80=(1.00275)^n
Take log of both sides
log(5000/1347.80)=nlog(1.00275)
n=log(5000/1347.80)/log(1.00275)
using calculator
n≈477 months or 39.78 yrs
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ans:
It will take approximately 40 years for the account to be worth $5,000
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