you deposit 3500 in an account that pays 4.5% annual interest, compounded monthly. How long will it take for the balance to reach 5000? Use formula A= P[1+(r/n)]^(ny) and use knowledge of logarithms.

Answer 1

P = Po(1+r)^n

P = $5000
Po = $3500

r = (4.5%/12)/100% = 0.00375 = Monthly % rate expressed as a decimal.

n = 12Comp/yr * T yrs = 12T = The # of
compounding periods.

P = 3500*(1.00375)^12T = 5000
(1.00375)^12T = 5000/3500 = 1.42857
Take Log of both sides:
12T*Log (1.00375) = Log 1.42857
12T = Log 1.42857/Log (1.00375)=95.29
T = 7.94 or 8 Yrs.