An investor has deposited $80,000!in an account that pays 5.3% annual interest, compounded continually .

Question

An investor has deposited $80,000 in an account that pays 5.3% annual interest, compounded continually. How long will it take until the accounts balance is $100,000? 

Answer 1

Continual compounded interest uses the formula

 

A = P * e^(r*t)

 

A is amount you want, so 100,000

P is principle or initial deposit, so 80,000 here

r is interest rate in decimal form, so 0.053 here

t is time in years

 

if you rearrange the formula, then you find that ln(A/P) = r*t and you can solve for t.