402,763 views
42 votes
42 votes
How much time will be needed for $21,000 to grow to $24,624.15 if deposited at 4% compounded quarterly?

User Rootless
by
2.8k points

1 Answer

24 votes
24 votes

Apply the compound interest formula:

A = P (1 + r/n)^nt

Where:

A = value after interest = 26,624.15

P = principal value = 21,000

r= interest rate in decimal form (divided by 100) = 4/100= 0.04

n= number of compounding periods in each year = 4

t= years

Replacing:

26,624.15 = 21,000 ( 1+ 0.04/4) ^4t

Solve for t:

26,624.15/21,000 = 1.01^4t

1.27 = 1.01 ^4t

log 1.27 = 4t log 1.01

log 1.27/ log 1.01 = 4t

23.84 = 4 t

23.84 /4 = t

5.96 years = t

User Derrick Mehaffy
by
2.4k points