Question

How long will it take for $480 to grow to $1,000 at the interest rate specified? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

a.	3%		periods
b.	6%		periods
c.	12%		periods

Answer 1

We use the formula:  
A=P(1+r/100)^n
where   
A=future value
P=present value  
r=rate of interest
n=time period.

a.1000=480*(1.03)^n

(1000/480)=(1.03)^n

Taking log on both sides;

log (1000/480)=n*log 1.03

n=log (1000/480)/log 1.03

=24.83 years(Approx)

b.1000=480*(1.06)^n

(1000/480)=(1.06)^n

Taking log on both sides;

log (1000/480)=n*log 1.06

n=log (1000/480)/log 1.06

=12.6 years(Approx)

c.1000=480*(1.12)^n

(1000/480)=(1.12)^n

Taking log on both sides;

log (1000/480)=n*log 1.12

n=log (1000/480)/log 1.12

=6.48 years(Approx)