Problema Solution
4. Val Hooper deposited $11,600 in the bank on January 1 a few years ago. The bank pays an
interest rate of 10% compounded annually, and the deposit is now worth $30,052. For how
many years has the deposit been invested?
Answer provided by our tutors
t = ? the number of years
A = $30,052 the future value after t year
P = $11,600 is the principal
m = 1 the number of compounding periods per year
n = m*t = t the number of compounding periods
r = 0.1 or 10% the annual interest rate
i = r/m = r = 0.1 interest rate per period
A = P(1 + r)^n
A = P(1 + r)^t
(1 + r)^t = A/P
t log (1 + r) = log (A/P)
t = (log(A/P))/(log(1 + r))
t = (log (30052/11600))/(log 1.1)
t = 9.98764 years
click here to see the step by step solution
the deposit has been invested for 9.98764 years.