Musa's parents deposited $20,000 in a long-term savings account as a wedding expenditure for their grand daughter at her birth, expecting it to triple by the time she gets married. Calculate the number of years for money to triple at 5% p.a. compounded monthly.

Question

Quizplus · Accepted Answer

The amount triples when it becomes $60,000. Using the formula 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, we can solve for t:$60,000 = $20,000(1 + 0.05/12)^(12t)3 = (1.00417)^12tlog(3) = 12t * log(1.00417)t = log(3) / (12 * log(1.00417))t ≈ 22 years

Musa's Parents Deposited $20,000 in a Long-Term Savings Account as a Wedding