(Advanced analysis)Susie has $500 invested in a financial asset earning an annually compounded interest rate of 8 percent.If Susie plans to cash in the asset when it is worth $700,about how long will she have to wait?

Question

Quizplus · Accepted Answer

The correct answer is A because the formula for compound interest is A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual interest rate, n is the number of times per year that the interest is compounded, and t is the number of years. In this case, we have P = $500, r = 8%, n = 1 (since the interest is compounded annually), and A = $700. Solving for t, we get t = log(A/P)/(n*log(1 + r/n)) = log(700/500)/(1*log(1 + 0.08/1)) = 4.4 years.

(Advanced Analysis)Susie Has $500 Invested in a Financial Asset Earning