I=$60 P=$750 R=4% What is the amount of time

Answer 1

with simple interest, no compounding

60 = 750(.04t)

t = 60/750(.04) = 25(60/750) = 25(6/75) = 6/3 = 2 years

in one year the interest is .04(750) =750/25 = 30

in two years 2x30 = $60 interest

with compounding interest, t <2 years

with annual compounding,

in one year $30

then in two years .04(780) = 780/25 = 156/5 = 31.2

total interest in two years = 30+31.2 = $61.20 >$60

less than two years to get $60

with continuous compounding

750+60= 810 = 750e^rt = 750e^.04t

ln(81/75) = .04t

t = 15ln(27/25)

t = 15ln1.08

t= about 1.1544 years

with daily, monthly or quartly compounding

the time needed to get $60 interest is

somewhere between 1.15 and 2 years