Question

Emily purchased a bond valued at

​$10 comma 00010,000

for highway construction for

​$4 comma 6504,650.

If the bond pays

7.57.5​%

annual interest compounded​ monthly, how long must she hold it until it reaches its full face​ value?

Answer 1

Compound Interest Formula is:

Given:
A = Final Amount = 10,000

P = Initial Principal Amount = 4,650

r = Rate of Interest = 0.075

n = Number of times interest is applied per year = 12

t = Number of years (to be found)

Substituting, we get:

So,

we get:

So,

we get:

Taking logarithm on both sides, we get:

So,

So,

Answer is:

10.2405 years