Question

you currently have $5600. First united bank will pay you an annual interest rate of 9.1, while second national bank will pay you an annual interest rate of 10.2. How many fewer years must you wait for your account value to grow to $15,700 at second national bank?

Answer 1

1.22 years

Step-by-step explanation:

The formula for calculating number of years:

FV / PV = (1 + r)^ n

FV = Future value

P = Present value

R = interest rate

N = number of years

at the first bank

$15700 / $5600 = (1.091)^n

2.80 = (1.091)^n

n = In 2.8 / In 1.091

to find n, take the IN of both sides

1.029619 / 0.08709 = 11.82 years

at the second bank

$15700 / $5600 = (1.091)^n

2.80 = (1.102)^n

n = n = In 2.8 / In 1.102

= 10.6 years

11.82 - 10.6 = 1.22 years