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Tara invests $555 into a savings account that has an interest rate of 12.6% and is compounded quarterly. How many years will it take for the account to reach a balance of $5,600?

User Kukosk
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Answer: 7 years.

Explanation:

We can use the formula for compound interest to solve this problem. The formula is:

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

where A is the ending balance, P is the principal (initial investment), r is the annual interest rate, n is the number of times the interest is compounded per year, and t is the time in years.

We know the principal, P, is $555, the annual interest rate, r, is 12.6%, and the ending balance, A, is $5,600. We also know that the interest is compounded quarterly, so n = 4.

Plugging in these values, we get:

5600 = 555(1 + 0.126/4)^(4t)

Simplifying and solving for t, we get:

t = (1/4) * log(5600/555) / log(1 + 0.126/4) = 7

Therefore, it will take 7 years for the account to reach a balance of $5,600.

User Stephan Stanisic
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