DessB
Answered

How long will it take for the balance of an account to double if the savings account earns 0.75% annual interest compounded monthly?

Hint: Set up the problem using the formula: A=P(1+r/n )^nt.

Verified Answer :

You're looking for the time \(t\) that it takes for the principal \(P\) to double, so \(A=2P\). Dividing both sides of the formula by \(P\) leaves you with

\(2=\left(1+\dfrac rn\right)^{nt}\)

You're given that the account earns 0.75% interest and that the interest is compounded monthly, so \(r=0.0075\) and \(n=12\).

\(2=\left(1+\dfrac{0.0075}{12}\right)^{12t}\)
\(\ln2=\ln\left(1+\dfrac{0.0075}{12}\right)^{12t}\)
\(\ln2=12t\ln\left(1+\dfrac{0.0075}{12}\right)\)
\(t=\dfrac{\ln2}{12\ln\left(1+\dfrac{0.0075}{12}\right)}\approx92.45\)