Answer:
It will take 4.858 years before the CD worth 8228.24
Explanation:
* Lets revise the compound interest
- The formula for compound interest, including principal sum, is:
A = P (1 + r/n)^(nt)
- Where:
• A = the future value of the investment/loan, including interest
• P = the principal investment amount (the initial deposit or loan amount)
• r = the annual interest rate (decimal)
• n = the number of times that interest is compounded per unit t
• t = the time the money is invested or borrowed for
- To find the time you can use the formula
t = ln(A/P) / n[ln(1 + r/n)]
* Lets solve the problem
∵ P = $5600
∵ A = 8228.24
∵ r = 8/100 = 0.08
∵ n = 4
- Substitute all of these values in the equation of t
∴ t = ln(8228.24/5600) / 4[ln(1 + 0.08/4)] = 4.858 years
* It will take 4.858 years before the CD worth 8228.24