mt 3 Use the equation for compound interest Suppose you have

mt 3. Use the equation for compound interest Suppose you have deposit F=P(1 + ) 7m $3,000 at 5% annual interest compounded monthly. a. Write the equation that models the growth of the money b. Solve algebraically. How long will it take for the money to reach S5,000?

Solution

F = P(1 + r/m)^mt

a) F = 3000 x (1 + 0.05/12)^12t

b) 5000 = 3000 x (1 + 0.05/12)^12t

=> log(5/3) = (12t)log(12.05/12)

=> t = 10.23778213 years

= 123 months