Log Application 2 - Compound Interest
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Lesson Summary:
In this lesson, we learn how to use logarithms to solve compound interest problems, specifically one that involves figuring out how long it will take for an investment to triple. We use the compound interest formula to set up the problem and then apply logarithms to solve for the unknown variable. Through this process, we also learn that the original amount invested doesn't matter when it comes to doubling or tripling, and we can use a simplified formula to find out how long it will take for any investment to double or triple.
Lesson Description:
Compound Interest using logarithms.
More free YouTube videos by Julie Harland are organized at http://yourmathgal.com
Questions answered by this video:
- What are some applications of logarithms?
- How do you compute compound interest?
- How do you do compound interest problems?
- What is the formula for compound interest and what does each variable stand for?
- How do you solve for the exponent in an equation?
- How can you check your solution to a compound interest word problem?
- How many years does it take an investment of $4,000 to triple if it is put into a savings account earning 6% interest compound quarterly?
- How do you solve 3 = (1 + .06/4)^4t for t?
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Staff Review
This problem is very similar to the previous problem in that another compound interest problem is solved. Again, you are solving for the time variable, which is in the exponent, which means logarithms must be used. All steps are explained very well. Also, the solution is checked to ensure that the solution makes sense in the original question.
