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March 30, 2017

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Compound interest question:

When Aaron invested $100 at 4.5% p.a. annually compounding, it amounted to $142.21. For how many years was it invested?

Is there a way to solve this question without using the formula for compound interest?

  • Math - ,

    You could repeatedly divide by 1.045 until you reach appr 100

    e.g.
    142.21/ 1.045 = 136.086 -- once
    136.086/1.045 = 130.2256 --twice
    ....
    109.20/1.045 = 104.50 -- 7 times
    104.50/1.045 = 100 -- 8 times

    so it took 8 years

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