Long-Term Investments Exercises 41-48 are based on the following table, which lists interest rates on long-term investments (based on 10-year government bonds) in several countries in 2014.37 [HINT: See Example 2.]
Assuming that you invest $10,000 in the United States, how long (to the nearest year) must you wait before your investment is worth $15,000 if the interest is compounded annually?
To calculate: The time a person must wait for his investment of in United States to become if the interest is compounded annually.
The investment amount is . The returned amount is .
The interest rate table is,
The formula for compound interest is,
Here, is the returned amount, is invested amount, is rate of interest, the number of time in a year interest is compounded and is time in year.
The logarithmic relation of indices is,
The rate of interest in United States is 2.5%.
This can be expressed in decimal form as,
The interest is compounded annually therefore,
Substitute , , and in the formula ,
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