A person invests 6000 dollars in a bank. The bank pays 6.25% interest compounded monthly. To the nearest tenth of a year, how long must the person leave the money in the bank until it reaches 8800 dollars?

Solution

A p erso n in v es t s 6000 d o ll a rs in a bank . T h e bank p a ys 6.25% in t eres t co m p o u n d e d m o n t h 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 8800 d o ll a rs ?

Time : 6.14

Solution steps

Translate the problem into an equation:

8800 = 6000 (1 + \frac{0.0625}{12})^{12 t}

Solve for

t, 8800 = 6000 (1 + \frac{0.0625}{12})^{12 t} : t = 6.14

Time : 6.14