You deposit $1,000 in a long-term certificate of deposit with an interest rate of 9%. How many years will it take for you to triple your deposit? Pick the closest answer.
A) 11 years
B) 12 years
C) 13 years
D) 14 years

Question

Quizplus · Accepted Answer

To triple the deposit, you need to earn a total interest of $2,000 (3 times the initial deposit of $1,000). Using the formula A = P(1+r/n)^(nt), where A is the amount after t years, P is the principal, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years, we can solve for t. In this case, we have A = $3,000, P = $1,000, r = 0.09 (9%), n = 1 (compounded annually). Plugging these values into the formula, we get:

$3,000 = $1,000(1+0.09/1)^(1t)
3 = (1.09)^t
log 3 = t log 1.09
t = log 3 / log 1.09
t ≈ 12.89

Rounding to the nearest year, we get 13 years. Therefore, the closest answer is C) 13 years.

You Deposit $1,000 in a Long-Term Certificate of Deposit with an Interest