Question 882252: you deposit $2000 in an account that pays 6% annual interest, compounded quarterly. How long will it take for the balance to reach $2500
Answer by lwsshak3(11628)   (Show Source):
You can put this solution on YOUR website! you deposit $2000 in an account that pays 6% annual interest, compounded quarterly. How long will it take for the balance to reach $2500
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compound Interest Formula: A=P(1+i)^n, P=initial investment, i=interest rate per compounding period, n=number of compounding periods, A=amount after n-compounding periods.
For given problem:
P=$2000
i=.06/4=0.015
n=?
A=$2500
..
2500=2000(1+.015)^n
2500/2000=1.015^n
1.25=1.105^n
log(1.25)=nlog(1.015)
n=log(1.25)/log(1.015)≈15
15 compounding periods=15/4=3yrs and 3 months
How long will it take for the balance to reach $2500? 3yrs and 3 months
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