In this lesson, we learn how to use logarithms to solve a compound interest problem. The problem asks us to find out how long it takes for $1,300 invested at a 9% interest rate, compounded monthly, to increase to $2,000. By identifying the known variables and using the compound interest formula, we fill in the numbers and simplify the equation. We then use logarithms to solve for the exponent and find that it takes approximately 4.8 years for the investment to grow to $2,000. Finally, we check our answer by plugging it back into the original equation and verifying that it makes sense.
Compound Interest using logarithms.
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