Question

A principle of $3600 is invested at 7.75% interest, compound annually. How many years will it take to accumulate $10,000 or more in the account?

Answer 1

It would take 14 years for the account to accumulate over $10000.

Explanation:

To work this out, you need to turn the 7.75% annual interest into a multiplier, which is 1.0775

To work out the years taken, start with an estimate, such as 15 years

$3600 x 1.0775^15 = $11029.65

Despite this going over $10000, you need to find out the exact year it surpasses the amount, so I lowered the amount of years to 13 and 14 to see which year it goes past $10000

$3600 x 1.0775^13 = $9500.08

Since after 13 years it hadn't gone past $10000, I knew that the exact year was year 14

$3600 x 1.0775^14 = $10236.33