You have $2,000 today in your savings account.How long must you wait for your savings to be worth $4,500 if you are earning 1.25 percent interest, compounded annually?
A)89.66 years
B)62.78 years
C)70.92 years
D)67.98 years
E)65.28 years

Question

Quizplus · Accepted Answer

The correct answer is E.The formula for compound interest is A = P(1 + r/n)^(nt), where A is the final amount, P is the principal (initial amount), r is the annual interest rate, n is the number of times per year that the interest is compounded, and t is the number of years.In this case, we have P = $2,000, r = 1.25%, n = 1 (compounded annually), and A = $4,500. We can solve for t by plugging these values into the formula and solving for t:$4,500 = $2,000(1 + 0.0125/1)^(1*t)$4,500 = $2,000(1.0125)^t$4,500/$2,000 = 1.0125^t2.25 = 1.0125^tt = log(2.25)/log(1.0125)t = 65.28 yearsTherefore, it will take 65.28 years for the savings to be worth $4,500.

You Have $2,000 Today in Your Savings Account