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You can earn .52 percent per month at your bank. Required: If you deposit $3,500, how long must you wait until your account has grown to $6,500? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places

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User Wrozwad
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9.2k points

1 Answer

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To find out how long it takes for a deposit to grow to a certain amount, use the compound interest formula. For a deposit of $3,500 growing to $6,500 at a monthly interest rate of 0.52%, the equation is $6,500 = $3,500(1 + 0.0052/12)^12t, which you can solve for time, t, using logarithmic functions.

To calculate how long it takes for a deposit to grow to a certain amount with compound interest, you can use the formula for compound interest:

A = P(1 + r/n)nt

Where:

A is the amount of money accumulated after n years, including interest.

P is the principal amount (the initial amount of money).

r is the annual interest rate (decimal).

n is the number of times that interest is compounded per year.

t is the time the money is invested or borrowed for, in years.

In your case:

A is $6,500 (the desired amount).

P is $3,500 (your initial deposit).

r is 0.0052, as the monthly interest rate is 0.52% (0.52/100 to convert percentage to a decimal).

n is 12, since the interest is compounded monthly.

t is what we're solving for.

First, you'll need to set up the equation based on the information provided:

$6,500 = $3,500(1 + 0.0052/12)12t

Then, you can solve for t:

t = ln($6,500 / $3,500) / (12 * ln(1 + 0.0052/12))

Calculating this gives you the number of years you need to wait until your account has grown to $6,500.

You would use a calculator for this step and ensure you round your answer to two decimal places as directed.

answered
User Carles Mitjans
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8.3k points

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