Suppose you deposit $2,000 in a savings account that pays interest at an annual rate of 4%. If no money is added or withdrawn from the account, answer the following questions.
1.) How much money will be in the account after 3 years?
2.) How much money will be in the account after 18 years?
3.) How many years will it take for the account to contain $2,500?
4.) How many years will it take for the account to contain $3,000?
the unknown is the time in our formula
2000(1.04)^t = 2500
1.04^t = 1.25
take log of both sides
log[ (1.04^t] = log 1.25
use rules of logs
t log 1.04 = log 1.25
t = log 1.25/log 1.04 = appr 5.7 years