Compound Interest Calculation: How Long Does It Take to Grow Your Investment?

How long does it take for $14050 to grow to $26500, if interest rates are set at 15%?

O 4.54 years O 423.33 years O 0.59 years O 12.23 years

Answer:

It takes approximately 4.54 years for $14,050 to grow to $26,500 with an interest rate of 15%.

To determine the time it takes for an amount to grow to a specified value with a given interest rate, we can use the formula for compound interest:

Final Amount = Initial Amount * (1 + Interest Rate)^Time

In this case, we want to find the time it takes for $14,050 to grow to $26,500 with an interest rate of 15%. Rearranging the formula, we have:

Time = log(Final Amount / Initial Amount) / log(1 + Interest Rate)

Time = log(26,500 / 14,050) / log(1 + 0.15)

Using a calculator, we can compute the value:

Time ≈ 4.54 years

The correct answer choice is O 4.54 years.

Compound interest is an important concept in finance and investing. It allows your money to grow over time, earning interest not only on the initial amount but also on the interest that has been added to your account. To make the most of compound interest, it's essential to understand how it works and how it can impact your investments. By taking the time to learn about compound interest, you can make informed decisions about saving and investing your money for the future.