Problema Solution
How many years will it take for $490 to grow to $1064.55 if it’s invested at 5 percent compounded annually?
Answer provided by our tutors
P = $490 the principal
r = 0.05 or 5% annual interest rate
A = $1064.55 the future value
t = the time in years
A = P(1 + r)^t
Plug the values into the last equation:
1064.55 = 490(1 + 0.05)^t
490(1 + 0.05)^t = 1064.55
1.05^t = 1064.55/400
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t = 20.06 yr
It will take 20.06 years for $490 to grow to $1064.55.