The formula for compound interest is

where P is the principal (original) amount, r is the interest rate (in decimal form), n is the number of times per year the interest compounds, t is the time in years, and A is the final amount.

In this problem, we are solving for time, t. The given variables from the problem are:

Plugging these into the equation above, we get

This simplifies to

We can solve this by taking the natural log of both sides

The formula for compound interest is

where P is the principal (original) amount, r is the interest rate (in decimal form), n is the number of times per year the interest compounds, t is the time in years, and A is the final amount.

In this problem, we are solving for the principal, P. The given variables from the problem are:

Plugging these into the equation above, we get

Solving for P, we get

Each year, you can calculate your interest by multiplying the principle () by. For one year, this would be:

For two years, it would be:

, which is the same as

Therefore, you can solve for a five year period by doing:

Using your calculator, you can expand theinto a series of multiplications. This gives you, which is closest to.

It is easiest to break this down into steps. For each year, you will multiply byto calculate the new value. Therefore, let's make a chart:

After year 1:; Total interest:

After year 2:; Let us round this to; Total interest:

After year 3:; Let us round this to; Total interest:

Thus, the positive difference of the interest from the last period and the interest from the first period is:

Recall that the equation for compounded interest (with annual compounding) is:

Whereis the balance,is the rate of interest, andis the number of years.

Thus, for our data, we need to know:

This is approximately.

Recall that the equation for compounded interest (with annual compounding) is:

Whereis the balance,is the rate of interest, andis the number of years.

Thus, for our data, we need to know:

This is approximately.

Recall that the equation for compounded interest (with quarterly compounding) is:

Whereis the balance,is the rate of interest,is the number of years, andis the number of times it is compounded per year.

Thus, for our data, we need to know:

This is approximately.

Recall that the equation for compounded interest (with annual compounding) is:

Whereis the balance,is the rate of interest, andis the number of years.

Thus, for our data, we need to know:

Now, let's usefor. This gives us:

Using a logarithm, this can be rewritten:

This can be rewritten:

Now, you can solve for:

or

Now, finally you can rewrite this as:

Thus,

Now, round this toand recall that

Thus,andor

First, break the problem into two segments: the amount Jack invests in the high-yield savings, and the amount Jack invests in the simple interest account (10,000 and 5,000 respectively).

Now let's work with the high-yield savings account. $10,000 is invested at an annual rate of 8%, compounded quarterly. We can use the compound interest formula to solve:

Plug in the values given:

Therefore, Jack makes $824.32 off his high-yield savings account. Now let's calculate the other interest:

Add the two together, and we see that Jack makes a total of,off of his investments.

The formula to use for compounded interest is

wherePis the principal (original) amount,ris the interest rate (expressed in decimal form),nis the number of times per year the interest compounds, andtis the total number of years the money is left in the bank. In this problem,P=1,500,r=0.042,n=12, andt=3.

By plugging in, we find that Michelle will have about $1,701 at the end of three years.