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27 votes
27 votes
19) Mr. Kelly finds a nice little bank (GOLIATH NATIONAL BANK) to invest the money he made from his

DAD-PUN-A-DAY calendar sales. He puts in $4,500 initially in an account that pays 24% interest
compounded quarterly. How long will it take for his money to reach the $15,000 he needs to buy some
real jokes?

User Brian Rothstein
by
2.2k points

1 Answer

11 votes
11 votes

Answer:

Explanation:

Answer: it will take 17.5 years to double his money in the account.

Explanation:

We would apply the formula for determining compound interest which is expressed as

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

Where

A = total amount in the account at the end of t years

r represents the interest rate.

n represents the periodic interval at which it was compounded.

P represents the principal or initial amount deposited

From the information given,

P = $500

A = 500 × 2 = $1000

r = 4% = 4/100 = 0.04

n = 4 because it was compounded 3 times in a year.

Therefore,.

1000 = 500(1 + 0.04/4)^4 × t

1000/500 = (1 + 0.01)^4t

2 = (1.01)^4t

Taking log of both sides, it becomes

Log2 = 4tlog 1.01

0.301 = 4t × 0.0043 = 0.0172t

t = 0.301/0.0172

t = 17.5 years

User Dhk
by
2.9k points
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