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$300 interest will be earned in approximately--------- years. (Round to the nearest tenth.)

$300 interest will be earned in approximately--------- years. (Round to the nearest-example-1
User Emmy
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1 Answer

3 votes

Answer:

10.2 years

Explanation:

You want to know the number of years it takes an investment of $600 to earn $300 in interest at the rate of 4% compounded quarterly.

Value

After earning $300 interest, the $600 investment will have a value of ...

$300 +600 = $900

Using the given numbers in the given formula, we have ...

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

900 = 600(1 +0.04/4)^(4t)

900/600 = (1 +0.04/4)^(4t)

Taking logarithms, we have ...

log(900/600) = 4t·log(1 +0.04/4)

Dividing by the coefficient of t gives ...

t = log(900/600)/(4·log(1 +0.04/4)) ≈ 10.2

$300 interest will be earned in approximately 10.2 years.

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Additional comment

Of course, we can simplify the expression to ...

t = log(1.5)/(4·log(1.01))

In the attachment, we elected to let the calculator do all the work.

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$300 interest will be earned in approximately--------- years. (Round to the nearest-example-1
User Lexicon
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