Caleb invested 8,800 in an account paying an interest rate of 2.8% compounded daily. Assuming no deposits or withdrawals are made, how long would it take, to the nearest tenth of a year, for the value of the account to reach 13,060?

Solution

C a l e b in v es t e d 8, 800 in an a cco u n t p a y in g an in t eres t r a t e o f 2.8% co m p o u n d e d d ai l y . A ss u min g n o d e p os i t s or w i t h d r a w a l s a re ma d e, h o w l o n g w o u l d i t t ak e, t o t h e n e a res t t e n t h o f a ye a r, f or t h e v a l u e o f t h e a cco u n t t o re a c h 13, 060 ?

Time : 14.1

Solution steps

Translate the problem into an equation:

13060 = 8800 (1 + \frac{0.028}{365})^{365 t}

Solve for

t, 13060 = 8800 (1 + \frac{0.028}{365})^{365 t} : t = 14.1

Time : 14.1