When you were born, your parents opened an account in your name and deposited 500.00 into the account. The account has earned an average annual rate of return of 12.5%. Today, the account is valued at 79,164.13. How old are you?

:confused:

Do you know the formula for computing compound interest? Starting with an initial principal amount P earning an annual interest rate of i%, the balance in the savings account grows by a factor of 1+i every year. Thus after the first year you have P*(1+i), after the second year P*(1+i)*(1+i), etc. After N years, you have:

P*(1+i)^N.


So, for this problem what you need to do is solve for N:

500*(1+.125)^N = 79164.13


Do you know how to solve that? If you know how to use logarithms it's pretty simple. Otherwise, another approach is to guess at N until you get the formula to work. Hope this helps.