Question

4) Cody invests $2,733 in a retirement

account with a fixed annual interest rate of
9% compounded 12 times per year.
How
long will it take for the account balance to
reach $9,589.78?

Answer 1

t = 14 years

Explanation:

r = R/100

r = 9/100

r = 0.09 per year,

Then, solve the equation for t

t = ln(A/P) / n[ln(1 + r/n)]

t = ln(9,589.78/2,733.00) / ( 12 × [ln(1 + 0.09/12)] )

t = ln(9,589.78/2,733.00) / ( 12 × [ln(1 + 0.0075)] )

t = 14 years

Summary:

The time required to get a total amount of $9,589.78 with compoundeded interest on a principal of $2,733.00 at an interest rate of 9% per year and compounded 12 times per year is 14 years.