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2 votes
Heather invests $3,377 in a retirement

account with a fixed annual interest rate of
8% compounded 2 times per year. How
long will it take for the account balance to
reach $14,989.87?

1 Answer

3 votes

Final answer:

Heather's account balance will reach $14,989.87 in approximately 12.69 years.

Step-by-step explanation:

To find the length of time it will take for the account balance to reach $14,989.87, we can use the formula for compound interest:

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

Where:

  • A is the final account balance, which is $14,989.87
  • P is the initial investment, which is $3,377
  • r is the annual interest rate, which is 8%
  • n is the number of times the interest is compounded per year, which is 2
  • t is the time in years

Plugging in these values, we have:

$14,989.87 = $3,377(1 + 0.08/2)^(2t)

Simplifying further:

4.442 = (1.04)^2t

Taking the logarithm of both sides:

log(4.442) = log[(1.04)^2t]

Using logarithmic properties, we can bring down the exponent:

log(4.442) = 2t log(1.04)

Dividing both sides by 2 log(1.04):

t = log(4.442) / (2 log(1.04))

Using a calculator, we find that t ≈ 12.69 years.

User Muz
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