Justin invested 7,300 in an account paying an interest rate of 1.5% compounded quarterly. 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 8,560?

Solution

J u s t in in v es t e d 7, 300 in an a cco u n t p a y in g an in t eres t r a t e o f 1.5% co m p o u n d e d q u a r t er 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 8, 560 ?

Time : 10.63

Solution steps

Translate the problem into an equation:

8560 = 7300 (1 + \frac{0.015}{4})^{4 t}

Solve for

t, 8560 = 7300 (1 + \frac{0.015}{4})^{4 t} : t = 10.63

Time : 10.63