Suppose you deposit $2,000 in a savings account that pays interest at an annual rate of 4%. If no money is added or withdrawn, determine how much will be in the account after 18 years.
You use the same formula as previous example:
In 18 years your account will have=$4,051.63
Yeah but what if you deposit $2,000 in a savings account that pays interest at an annual rate of 4%. If no money is added or withdrawn determine how many years it will take for the account to contain $2,500. Do I use the formula for that?
YES.You use exactly the same formula. But now you have to solve for n. You have to use Logs to do that. In your example: 2,500=2,000(1.04)^n=5.69 years, or 5 years and about 8 1/4 months.
I want you to try it and see if you can get the same answer that I did. If you are having problems, let me know. Good luck.
