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You invest $7500 into a mutual fund that is expected to earn 7% per year. How long will it take the fund to be worth $15,000?

 Apr 5, 2020
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An appropriate formula is:  A  =  P·(1 + r)n

 

where  A  =  final amount                       =  $15,000.00

            P  =  principal  =  initial amount  =  $7500.00

            r  =  yearly rate, as a decimal     =  0.07

            n  =  number of years                 = 

 

--->                  15,000  =  7500(1 + 0.07)n 

--->                           2  =  1.07n                      (divide both sides by 7500)

--->                    log(2)  =  log(1.07n)               (because the unknown is in the numerator, take the log of

                                                                               both sides)

--->                    log(2)  =  n·log(1.07)              (property of logs)

--->   log(2) / log(1.07)  =  n                             (divide both sides by log(1.07))

 

If you finish this, you will have your answer.

 Apr 6, 2020

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