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In what time will $1000 amount to $1331 at 10% per annum, compounded annually?​

Sagot :

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The time is 3 years


Step by step explanation:

Answer:

3 Years

Step-by-step explanation:

Compound interest is a multiplier that affects the new value each time.

If the compound interest is 10% per annum, the multiplier each year is 1.1.

Year 1: $1000 * 1.1 = $1100

Year 2: $1100* 1.1 = $1210

Year 3: $1210* 1.1 = $1331

This means that it will take 3 years for $1000 to amount to $1331 at 10% per annum.

Alternatively, you can use a logarithm. The calculation can be written as:

1000 * [tex]1.1^n[/tex] = 1331, where n is the number of years.

Rearranged, this gives [tex]1.1^n[/tex] = 1331/1000 or [tex]1.1^n[/tex] = 1.331.

A logarithm can work out the value of n, and is written in the form log1.1(1.331), which gives a value of 3.

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