A long lost relative died and left you $15,000! Your parents say that you need to save the money for college, so you put it an account that pays 8% interest compounded annually. How many years will it take until your account is worth $25,000? Homework Help ✎
Remember the annual compound interest formula.
A = P(1 + r)t
First substitute the values into the equation.
25000 = 15000(1.08)t
Divide both sides by 15000.
Remember the rules of logarithms and take the log of both sides.
Solve for t.
The account will be worth 25000 in between 6 and 7 years.
t = 6.64