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14 votes
14 votes
QUESTION 5 - 1 POINT

An investment of $32,000 is worth $38,302 after being compounded monthly at 3%. How many years was the investment
for? (Round to the nearest whole year).

User Kontrollfreak
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1 Answer

11 votes
11 votes

9514 1404 393

Answer:

6

Explanation:

The compound interest formula tells you the future value of principal P invested at annual rate r compounded n times per year for t years is ...

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

Solving for t, we get ...

t = log(A/P)/(n·log(1 +r/n))

Using the given values, we find t to be ...

t = log(38302/32000)/(12·log(1 +0.03/12)) ≈ 5.9997

The investment was for 6 years.

User Jesse Roper
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