Solving Logarithms Financial math help
Im pretty desperate. I have a test on compound interest and financial math tomorrow and missed a lesson on Logarthims. The teacher apparently went through it quickly and just showed everyone how to solve the problems using their calculator which because i have not even heard of a logarithm before this, i feel completely lost. I have been searching the net but all the problems do not look similar to the ones I have been given to practice on.
heres an example...
5000 = 2,500(1.00125)^t
I understand that logs help to find the exponent and that the 5000 is the amount of money hoping to acquire and 2,500 is the principal amount. What i am confused about is how this relates to the formula a^y = x?????
Most importantly can someone walk me through the steps of entering this in my calculator???
Thanks to all for any help!!!!!
Re: Solving Logarithms Financial math help
If a^y = x, then y = LOG(x) / LOG(a)
Originally Posted by nkuchmak
2,500(1.00125)^t = 5000
1.00125^t = 5000/2500 = 2
So t = LOG(2) / LOG(1.00125)