Question 608419: You deposit $2500 in an account that pays 3.5% annual percentage rate compounded monthly. What is the balance in this account at the end of 8 years?
b) After how many years does the balance reach $5,000?
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! You deposit $2500 in an account that pays 3.5% annual percentage rate compounded monthly.
a) What is the balance in this account at the end of 8 years?
A(t) = P(1+(r/n))^(nt)
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A(8) = 2500(1+(0.035/12))^(12*8)
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A(8) = 2500*1.3226
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A(8) = $3306.48
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b) After how many years does the balance reach $5,000?
5000 = 2500(1+(0.035/12))^(12t)
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(1.0029)^12t = 2
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12t*ln(1.0029) = ln(2)
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12t = 239.36
time = 19.95 years
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Cheers,
Stan H.
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