Compound Interest

The formula necessary to solve most compound interest problems is equation

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Example 1

How long would it take for an investment of $3,500 to become $4,200 if it is invested in an account that earns 6% compounded monthly?

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Since, in this problem, the variable is in the exponent, logarithms will be used to solve it.

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The $3,500 investment would have become $4,200 in about 3.05 years, or just over 3 years and 2 weeks.