Question

Fatima opens an account with 1300 that earns 3.5% interest, compounded monthly. How long will it take the account value to be $2500?

Answer 1

The formula to calculate the account value in future (compounded monthly):

A = Principal x (1 + rate/12)^(month)

=> 2500 = 1300 x (1 + (3.5/100)/12)^(month)

=> (1 + 0.00291)^(month) = 2500/1300

=> 1.00291^(month) = 1.923

=> month = log(1.923)/log(1.00291) = 225

=> It will take 225 months to have 2500 dollar in account.

Hope this helps!

:)