A bank account earns 2.5% interest per year. If the account starts with $500, approximately how many years will it take for the value of the account to be $750?

Question

Mathematics

Dominguez

5 September, 09:03

A bank account earns 2.5% interest per year. If the account starts with $500, approximately how many years will it take for the value of the account to be $750?

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Answers (1)

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Wilson · Answer 1

16.42 years

Step-by-step explanation:

Use the Future value formula; FV = PV (1+r) ^t

PV = Initial amount deposited, 500

r = interest rate or discount rate, 2.5%

t = total duration of the investment,?

FV = future value of account, 750

Plug in the numbers into the formula

750 = 500 * (1+0.025) ^t

divide both sides by 500

750/500 = 1.025^t

put ln on both sides

ln 1.5 = ln

ln 1.5 = t ln 1.025

0.4054651 = 0.0246926 t

Divide both sides by 0.0246926

0.4054651/0.0246926 = t

t = 16.42

16.42 years