Thread: Compoun 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?

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