A person invests 1000 dollars in a bank. The bank pays 7% interest compounded quarterly. To the nearest tenth of a year, how long must the person leave the money in the bank until it reaches 3400 dollars?

Solution

A p erso n in v es t s 1000 d o ll a rs in a bank . T h e bank p a ys 7% in t eres t co m p o u n d e d q u a r t er l y . T o t h e n e a res t t e n t h o f a ye a r, h o w l o n g m u s t t h e p erso n l e a v e t h e m o n ey in t h e bank u n t i l i t re a c h es 3400 d o ll a rs ?

Time : 17.64

Solution steps

Translate the problem into an equation:

3400 = 1000 (1 + \frac{0.07}{4})^{4 t}

Solve for

t, 3400 = 1000 (1 + \frac{0.07}{4})^{4 t} : t = 17.64

Time : 17.64