A person invests 8500 dollars in a bank. The bank pays 4.25% interest compounded daily. To the nearest tenth of a year, how long must the person leave the money in the bank until it reaches 12100 dollars?

Solution

A p erso n in v es t s 8500 d o ll a rs in a bank . T h e bank p a ys 4.25% in t eres t co m p o u n d e d d ai 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 12100 d o ll a rs ?

Time : 8.31

Solution steps

Translate the problem into an equation:

12100 = 8500 (1 + \frac{0.0425}{365})^{365 t}

Solve for

t, 12100 = 8500 (1 + \frac{0.0425}{365})^{365 t} : t = 8.31

Time : 8.31