Q:

opal deposited 2925.90$ into a savings account with an interest rate of 3.9% compounded twice a year. about how long will it take for the account to be worth 6000$

Accepted Solution

A:
Use the compound amount formula:

A = P (1 + r/n)^( r/n )

Here,

A $6000 = $2925.90 ( 1 + 0.039/2 )^(2t).  We must solve for t.

    2.051  = ( 1 + 0.0195 )^(2t)

Take the natural log of both sides:

ln 2.051 = (2t) ln 1.0195    leads to     (2t) ( 0.0193 ) = 0.7183

                                                                         0.7183
Then                                                      2t = -------------- = 37.219
                                                                        0.0193
                   37.219
Finally, t = ------------- = 18.6 years
                         2

This is reasonable, because we're going from $2925.90 to more than twice that, or $6000, at the relatively low interest rate of 3.9%.