Question

8500 dollars is placed in an account with an annual interest rate of 7%. To the
nearest year, how long will it take for the account value to reach 59700 dollars?

Answer 1

Using simple interest, it is found that it will take 86 years for the account value to reach 59700 dollars.

Simple Interest

Simple interest is used when there is a single compounding per time period.

The amount of money after t years in is modeled by:

$A(t) = A(0)(1 + rt)$

In which:

• A(0) is the initial amount.

• r is the interest rate, as a decimal.

In this problem, the parameters are as follows:

$A(t) = 59700, A(0) = 8500, r = 0.07$

Hence:

$A(t) = A(0)(1 + rt)$

$59700 = 8500(1 + 0.07t)$

$1 + 0.07t = \frac{59700}{8500}$

$1 + 0.07t = 7.0235$

$t = \frac{6.0235}{0.07}$

$t = 86$

Thus, it will take 86 years for the account value to reach 59700 dollars.

More can be learned about simple interest at https://brainly.com/question/25296782