Answer :
Time that is needed to pass before your account value at Second National Bank increases to $14,800 is 1.2 years
According to the given information
We use the formula:
A = P(1+r/100)^n
where
A = future value
P = present value
r = rate of interest
n = time period.
First United Bank
14800 = 5500*(1.09)^n
(14800/5500) = (1.09)^n
Taking log on both sides;
log (14800/5500) = n*log 1.09
n = log (14800/5500)/log 1.09
= 11.49 years(Approx)
Second National Bank:
14800 = 5500*(1.101)^n
(14800/5500) = (1.101)^n
Taking log on both sides;
log (14800/5500)=n*log 1.101
n = log (14800/5500)/log 1.101
= 10.29 years (Approx)
Hence
Fewer years to wait
= 11.49-10.29
= 1.2 years (Approx)
Time that is needed to pass before your account value at Second National Bank increases to $14,800 is 1.2 years
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