Jordan invested 8,500 in an account paying an interest rate of 4.1% compounded daily. Assuming no deposits or withdrawals are made, how long would it take, to the nearest year, for the value of the account to reach 13,070?

Solution

J or d an in v es t e d 8, 500 in an a cco u n t p a y in g an in t eres t r a t e o f 4.1% 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 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, 070 ?

Time : 10.49

Solution steps

Translate the problem into an equation:

13070 = 8500 (1 + \frac{0.041}{365})^{365 t}

Solve for

t, 13070 = 8500 (1 + \frac{0.041}{365})^{365 t} : t = 10.49

Time : 10.49