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Please help stuck on compound interest question?
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
- ?Lv 75 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.
- ?Lv 65 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