Question

If you put $2,000 into an interest bearing account, where interest is compounded quarterly (4 times a year) at 6%, how long will it take for your money to triple?

Answer 1

Answer:

$18.4\ years$  

Step-by-step explanation:

we know that    

The compound interest formula is equal to  

$A=P(1+\frac{r}{n})^{nt}$  

where  

A is the Final Investment Value  

P is the Principal amount of money to be invested  

r is the rate of interest  in decimal

t is Number of Time Periods  

n is the number of times interest is compounded per year

in this problem we have  

$t=?\ years\\ P=\ 2,000\\ r=0.06\\n=4\\A=\ 6,000$  

substitute in the formula above  

$\ 6,000=\ 2,000(1+\frac{0.06}{4})^{4t}$  

$3=(1.015)^{4t}$  

Applying log both sides

$log(3)=4tlog(1.015)$  

$t=log(3)/[4log(1.015)]$  

$t=18.4\ years$