If an ounce of gold, valued at $670, increases at a rate of 7.2 percent per year, how long will it take to be valued at $1,000? (Do not round intermediate calculations.

If an ounce of gold, valued at $670, increases at a rate of 7.2 percent per year, how long will it take to be valued at $1,000? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

 

ANSWER

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We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

1000=670*(1.072)^n

(1000/670)=(1.072)^n

Taking log on both sides;

log(1000/670)=n*log 1.072

n=log(1000/670)/log 1.072

which is equal to

=5.76 years(Approx)