Question

Alison deposits $500 into a new savings account that earns 5 percent interest compounded
annually. If Alison makes no additional deposits or withdrawals, how many years will it take
for the amount in the account to double?

Answer 1

Answer:

Step-by-step explanation:

formula for amount, when compound interest is given

A = P(1+ (r/100))^n

A= final amount

P= amount invested

r=compound interest

n= no of time periods

now amount must double, it means it must be 1000$

therefore,

1000=500(1+(5/100))^n

1000= 500(1.05)^n

2=(1.05)^n

taking log on both sides

log2=nlog1.05

n=log2/log1.05

n=14.2

rounding off

we get n=15 years or 14 years