Question

Suppose that $4000 is placed in a savings account at an annual rate of 9%, compounded monthly. Assuming that no

withdrawals are made, how long will it take for the account to grow to $6216?
Do not round any intermediate computations, and round your answer to the nearest hundredth.

_ years

Answer 1

below

Explanation:

The equation to use

FV = PV ( 1 + i)^n FV = 6216 PV = 4000

i = decimal interest per period = .09/12

n = how many months?

6216 = 4000 ( 1 + .09/12)^n

6216/4000 = (1 + .09/12)^n

1.554 = 1.0075 ^n

log 1.554 / log(1.0075) = n = 59 months (approx 5 years )