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? asked in Science & MathematicsMathematics · 5 years ago

Please help stuck on compound interest question?

Update:

At the begininning of the 2016, Jake invested $12000 in an account earning compound interest at a rate of 3% per quarter, compounded quarterly. Every quarter of a year, Jake checks the balance of his account because he wants to close it once it first exceeds $16000.

During which year will he close his account?

2 Answers

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  • Sqdancefan
    Lv 7
    5 years ago

    A = P(1.03^q) . . . where q is the number of quarters

    16000/12000 = 1.03^q . . . divide by P, substitute values

    log(4/3) = q*log(1.03) . . . take the log

    q = log(4/3)/log(1.03) = 9.73

    The desired balance will be reached in the 10th quarter, year 2018.

  • olliver
    Lv 6
    5 years ago

    n = LN(FV / PV) / LN(1 + i)

    n = LN(16000 / 12000) / LN(1 + 3%) = 9.73 quarters or 2.43 years, sometime in 2018

    Source(s): http://www.double-entry-bookkeeping.com/number-of-...
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