Question

You deposit $3000 into an account that pays 4.8% interest, compounded monthly. A) What is the value of the account after 5 years?B) How long will it take for the value of the account to reach $6000?

Answer 1

14.4 years (about 14 years 6 months)

Explanation:

Given data

Principal= $3000

Rate= 4.8%

A. Time= 5 years

The expression for compound interest is

A=P(1+r)^t

Substitute

A= 3000(1+0.048)^5

A= 3000(1.048)^5

A=3000*1.264

A=$3792

Hence the balance will be $3792

B. Final Amount A = $6000

The expression to find time is given ast

t= ln(A/P) / r

substitute

t= ln(6000/3000)/0.048

t= ln2/0.048

t= 0.6931/0.048

t=14.43

Hence the time is 14.4 years (about 14 years 6 months)approx