How many years will it take for an initial investment of $30,000 to grow to $75,000? Assume a rate of interest of 5%

Question

word problem

Answer 1

Use the formula

 

A = P(1 + r)^t

 

where:

A = final amount

P = initial investment

r = interest rate (decimal)

t = time (in years)

 

Given:

A = 75000

P = 35000

r = 0.05

 

Solve for t, using logs.

 

A / P = (1 + r)^t

 

Log(A / P) = tLog(1 + r)

 

 

Divide both sides of the equation by Log(1 + r).

 

[Log(A / P)] / [Log(1 + r)] = t

 

 

Plug in the given values into the formula to solve for t.