Question

Last week you earned $500 at work and decided you want to invest it in a high rate high stakes investment account. The account earns 11% interest and is compounded daily. How long will you have to leave the money in the account to have $650?

Answer 1

t = 2.4 years

Explanation:

t = log(A/P) / n[log(1 + r/n)]

A = future earnings = $650

P = principal = $500

r = interest rate = 11%

n = 365

t = ? Years

t = log(A/P) / n[log(1 + r/n)]

= log (650/500) / 365{log(1 + 0.11/365)}

= log(1.3) / 365{log(1 + 0.00030)}

= 0.1139 / 365{log(1.00030)}

= 0.1139 / 365(0.00013)

= 0.1139 / 0.04745

= 2.4

t = 2.4 years