Question

You deposit the same $10,000 into a bank account at 4% annual interest. How long will it take for the $10,000 to compound to $30,000?

N= I/Y= PV= PMT= FV= P/Y=

Answer 1

time = 28 years

Explanation:

Given,

principal amount = $10,000

rate = 4%

total amount = $30,000

According to compound interest formula

`A\ =\ P(1+r)^t`

where, A = total amount

P = principal amount

r = rate

t = time in years

so, from the question we can write,

`30000\ =\ 10000(1+0.04)^t`

`=>\ (30000)/(10000)\ =\ (1+0.04)^t`

`=>\ 3\ =\ (1.04)^t`

by taking log on both sides, we will get

=> log3 = t.log(1.04)

`=>\ t\ =\ (log3)/(log1.04)`

=> t = 28.01

So, the time taken to get the amount from 10000 to 30000 is 28 years.