I need to calculate the time (n) period of the following If I deposit $1200 and

Question

I need to calculate the time (n) period of the following If I deposit $1200 and it will become $3000 with a annualcompounded interest ate of 8.5%. How long will it take to become$3000? Is this the payback period? I uderstand that with the paybackperiod I need the amount generated each year... I dont havethis... I am confuse and i dont know what formula to use Thanks! I need to calculate the time (n) period of the following If I deposit $1200 and it will become $3000 with a annualcompounded interest ate of 8.5%. How long will it take to become$3000? Is this the payback period? I uderstand that with the paybackperiod I need the amount generated each year... I dont havethis... I am confuse and i dont know what formula to use Thanks!

Explanation / Answer

We know that FV=PV*(1+I)^N we have from data FV=3000, PV=1200, I=8.5% & we need to findN So we get 3000 = 1200*(1+8.5%)^N i.e 1.085^N = 3000/1200=2.5 Taking Log of both sides, we get Log (1.085^N) = Log (2.5) i.e N Log 1.085 = Log 2.5 = 0.3979 i.e N = 0.3979/0.03542 = 11.23Yrs

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