Question

Supposed you deposit 5,000 in a savings account that earns 3% annual interest. If you make no other withdrawals or deposit how many years will it take the account balance to reach at least 6,000

Answer 1

It would take at least 7 years for the account balance to reach at least $6000.

Explanation:

The formula used to solve for the amount of interest made over time is: I = PRT, where I = interest earned, P = principal amount, R = rate and T = times. In this case, the principal amount is $5000. The annual rate is 3% (or the decimal equivalent of 0.03), the amount of interest earned should be equal to $1000, since the total amount in the account should be at least $6000. So, the variable that we are solving for is 'T' or time.

I = PRT

1000 = 5000(0.03)T

1000 = 150T

6.67 = T

So, the amount of full years would be rounded to 7.