Compound interest:

If $500 is invested at 4.5% compounded annually, how many years will it take for the balance to exceed $1000?

  1. Calculations:

    After 1 year: 500 + .045*500 = 522.50 = 500*(1.045)

    After 2 years: 522.50 + .045*522.50 = 522.50*(1.045)

    NewBalance = OldBalance*(1.045)


  2. Constant: RATE (= .045)

  3. Variables:

    The current balance

    The current year