Mario decided to invest his $620 tax refund rather than spending it. He found a bank that would pay him 4% interest, compounded quarterly. Mario deposits the entire $620 refund and does not deposit or withdraw any other amount.

a. Write an equation that models the growth of the investment.
b. How many years will it take for the initial investment to double?

Question

Mario decided to invest his $620 tax refund rather than spending it. He found a bank that would pay him 4% interest, compounded quarterly. Mario deposits the entire $620 refund and does not deposit or withdraw any other amount.

a.	Write an equation that models the growth of the investment.
b.	How many years will it take for the initial investment to double?

anonymous · Answer

You need a formula  $$A = A _{0}(1+r/n)^{nt}$$
$$A _{0}$$  = principal amount (the initial amount you borrow or deposit)
r  = annual rate of interest (as a decimal)
t  = number of years the amount is deposited or borrowed for.
A = amount of money accumulated after n years, including interest.
n  =  number of times the interest is compounded per year 
Plug in your numbers and you've answered part a.

For part b. Set A = 2 X$620 = 1,240 and $$A _{0}=620$$
and work it until you have the t.