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Popular Word Problems >

Suppose that 5000 is placed in a savings account at an annual rate of 4.2%, compounded monthly. Assuming that no withdrawals are made, how long will it take for the account to grow to 5650?

Solution

S u pp ose t ha t 5000 i s pl a ce d in a s a v in g s a cco u n t a t an ann u a l r a t e o f 4.2%, co m p o u n d e d m o n t h l y . A ss u min g t ha t n o w i t h d r a w a l s a re ma d e, h o w l o n g w i ll i t t ak e f or t h e a cco u n t t o g ro w t o 5650 ?

Solution

Time : 2.92

Solution steps

Translate the problem into an equation:

5650 = 5000 (1 + \frac{0.042}{12})^{12 t}

Solve for

t, 5650 = 5000 (1 + \frac{0.042}{12})^{12 t} : t = 2.92

Time : 2.92

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