Question

A loan of $20,000 is made at 7% interest, compounded annually. After how many years will the amount due reach $41,000 or more?​

Answer 1

Explanation:

11 years

Using the compound interest formula. :

Final amount, A = 41000 or more

Rate, r = 7% = 0.07

Loan amount, P = 20,000

Number of compounding times per period = 1

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

41000 = 20000(1 + 0.07)^t

41000/20000 = 1.07^t

2.05 = 1.07^t

t = log(2.05) / log(1.07)

t = 10.609727

t = 11 years