Answer:
time = 101.84 years
Explanation:
The formula for compound interest is given by:
A(t) = P(1 + r/n)^(nt), where
- A(t) is the amount in the account after t years (i.e., 35007 in this problem),
- P is principal (i.e., the deposit, which is $2500 in this problem),
- r is the interest rate (percentage becomes a decimal in the formula so 2.6% becomes 0.026),
- n is the number of compounding periods per year (i.e., 4 for money compounded quarterly since there are 4 quarters in a year),
- and t is the time in years.
Thus, we can plug in 35007 for A(t), 2500 for P, 0.026 for r, and 4 for n in the compound interest formula to find t, the time in years (rounded to the nearest hundredth) that it will take for the savings account to reach 35007:
Step 1: Plug in values for A(t), P, r, and n. Then simplify:
35007 = 2500(1 + 0.026/4)^(4t)
35007 = 2500(1.0065)^(4t)
Step 2: Divide both sides by 2500:
(35007 = 2500(1.0065)^4t)) / 2500
14.0028 = (1.0065)^(4t)
Step 3: Take the log of both sides:
log (14.0028) = log (1.0065^(4t))
Step 4: Apply the power rule of logs and bring down 4t on the right-hand side of the equation:
log (14.0028) = 4t * log (1.0065)
Step 4: Divide both sides by log 1.0065:
(log (14.0028) = 4t * (1.0065)) / log (1.0065)
log (14.0028) / log (1.0065) = 4t
Step 5; Multiply both sides by 1/4 (same as dividing both sides by 4) to solve for t. Then round to the nearest hundredth to find the final answer:
1/4 * (log (14.0028) / log (1.0065) = 4t)
101.8394474 = t
101.84 = t
Thus, it will take about 101.84 years for the money in the savings account to reach $35007