Question

$250.00 is left in a savings account at 4.0% and the interest is compounded continuously. If the balance is now
$330.78, then how many years was the money been in the account?

Need it worked out

Answer 1

Compound interest can be defined as the compounded interest on a particular sum of money which can be a loan, savings, or an investment.

The money has been in the account for 7 years.

From the question, we can deduce that we are to solve for time "t".

In compound interest, the formula to solve for time "t" is given as:

t = ln(A/P) / r

where:

P = Principal = $250.00

R = Interest rate = 4.0%

A = Accumulated or final amount = $330.78

• Step 1: First, convert R as a percent to r as a decimal

r = R/100

r = 4/100

r = 0.04 per year

• Step 2: Solve the equation for t

t = ln(A/P) / r

t = ln(330.78/250.00) / 0.04

t = 7 years

Therefore, the money has been in the account for 7 years.

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