Question

Manuel invested $10,000 in a savings account with a 3% interest rate that gets compounded daily. Write a model for Manuel to track/predict his money's value over time. In how many years will the value of the account be $12,000?

Answer 1

It will take 6.2 years for the value of the account to be $12,000

Explanation:

P x (1 + rn)

Where P = Principal

r rate of interest

n = number of time interest is calculated in a year

$10,000 x (1.03)N = $12,000

(1.03)N = $12000 / $10000

(1.03)N = 1.2

Taking natural log,

N x ln 1.03 = ln 1.2

N x 0.0296 = 0.1823

N = 6.2 years