Faisal has $17,000 in his savings account and can save an additional $5,100 per year. If interest...

Question:

Faisal has $17,000 in his savings account and can save an additional $5,100 per year. If interest rates are 12%, how long will it take his savings to grow to $52,000??

Time to Double:

If you are interested in finding out how long it will take for an investment to double, you can use the Rule of 72. According to this rule. the years needed are 72 / r, where r is the interest rate in percentage. For example, if r = 10%, it will take 72 / 10 = 7.2 years.

Answer and Explanation:

We know:

  • PV = initial or present value = $17,000
  • r = 12% = interest rate
  • PMT = payment = $5,100
  • FV = future value = 52.000

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How to Calculate Future Value: Formula & Example

from Financial Accounting: Help and Review

Chapter 5 / Lesson 16
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