Respuesta :
It takes 32.5months to become 21000
We know,
C. I ⇒ A=P(1+r/n)^n t
Where,
P = principal amount (the initial amount you borrow or deposit), given in question$3000
r = annual rate of interest (as a decimal), in this case 0.06
t = number of years the amount is deposited or borrowed for, in this case we don't know it
A = amount of money accumulated after n years, including interest, in this case $21000
n = number of times the interest is compounded per year, in this case 12
This gives us 21,000=3,000(1+0.06/12)^12t
After simplification, 7=(1.005)^12t
By taking the logarithm of both sides,
Log 7=Log1.005^12t
12t = Log 7/Log 1.005
12t =390.1545
This gives us 32.5months
Compound interest is the interest you earn on interest. This can be illustrated by using basic math: if you have $100 and it earns 5% interest each year, you'll have $105 at the end of the first year. At the end of the second year, you'll have $110.25. Not only did you earn $5 on the initial $100 deposit, you also earned $0.25 on the $5 in interest. While 25 cents may not sound like much at first, it adds up over time. Even if you never add another dime to that account, in 10 years you'll have more than $162 thanks to the power of compound interest, and in 25 years you'll have almost $340
you don’t earn a set interest rate but rather a return based on the change in the value of your investment. When the value of your investment goes up, you earn a return.
If you leave your money and the returns you earn invested in the market, those returns are compounded over time in the same way that interest is compounded.
If you invested $10,000 in a mutual fund and the fund earned a 7% return for the year, you’d gain about $700, and your investment would be worth $10,700. If you got an average 7% return the following year, your investment would then be worth about $11,500.
Over the years, your investment can really grow: If you kept that money in a retirement account over 30 years and earned that average 7% return, for example, your $10,000 would grow to more than $76,000.
In reality, investment returns will vary year to year and even day to day. In the short term, riskier investments such as stocks or stock mutual funds may actually lose value. But over a long time horizon, history shows that a diversified growth portfolio can return an average of 6% to 7% annually. Investment returns are typically shown at an annual rate of return.
The average stock market return is historically 10% annually, though that rate is reduced by inflation. Investors can currently expect inflation to reduce purchasing power by 2% to 3% a year.
Compounding can help fulfil your long-term savings and investment goals, especially if you have time to let it work its magic over years or decades. You can earn far more than what you started with.
learn more about compound interest here : brainly.com/question/14295570
SPJ 9
