You have $100,000 in your account. Assuming no additional deposits are made and your account earns 15% per year, how long will it take for the account to have a balance of $500,000?
A) 10.28 years
B) 11.09 years
C) 11.52 years
D) 12.64 years

Question

Quizplus · Accepted Answer

We can use the formula for compound interest to solve this problem:
A = P(1+r/n)^(nt)
where A is the ending balance, P is the starting balance, r is the interest rate, n is the number of times interest is compounded per year, and t is the number of years.

Plugging in the given values, we get:
500,000 = 100,000(1+0.15/1)^(1*t)
5 = (1.15)^t
t = log(5)/log(1.15)
t ≈ 11.52

Therefore, it will take approximately 11.52 years for the account to have a balance of $500,000.

You Have $100,000 in Your Account