Question

suppose you deposit 1,000 ina savings account that pays interest at an annual rate of 5%. if no money is added or withdrawn from the account answer the following questions. How much money will be in the account after 3 years? How much will be in the account after 18 years? How many years will it take for the account to contain 1,500? How many years will it take for the account to contain 2,000?

Answer 1

After three years: $1000(1+0.05)^3 = $1157.63

Time req'd for amount to reach $1500 from $1000:

1500=1000(1+0.05)^t, or 1.5=1.05^t
ln 1.5
ln 1.5 = t ln 1.05, so that t = ------------ = 8.31 years, or 8 yr 3 3/4 months
ln 1.05