Calvin invests $5000 at 5% p.a. Chloe invests $4000 at 7% p.a. How long will it take for their respective balances to be equal?

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- Sep 1st 2008, 03:27 AMMonorailCompoun Interest
Calvin invests $5000 at 5% p.a. Chloe invests $4000 at 7% p.a. How long will it take for their respective balances to be equal?

- Sep 1st 2008, 05:02 AMskeeter
for interest "paid annually" (I'm guessing that's what p.a. means)

$\displaystyle A = P(1 + r)^t$

where A = account balance

P = initial principle

r = annual percentage rate

t = time in years

you want to know when the account balances are equal ...

$\displaystyle 5000(1.05)^t = 4000(1.07)^t$

solve for t