How Long Will It Take for Faisal's Savings to Grow to $50,000?
Calculating the Time Needed for Faisal's Savings to Grow
Faisal's Initial Savings: $15,000
Additional Annual Savings: $4,500
Interest Rate: 12%
Target Savings Amount: $50,000
To calculate the time needed for Faisal's savings to reach $50,000, we will use the Present Value, Annual Savings, Interest Rate, and Future Value formula.
Present Value (Pv): $15,000
Annual Savings (Pmt): $4,500
Number of Payments/Year (P/yr): 1
Interest Rate (r): 12%
Future Value (Fv): $50,000
Using a financial calculator, we can input these values to find the time required for Faisal's savings to grow to $50,000. The calculated period is 4.50, which translates to 4 years and 6 months.
Therefore, it will take Faisal 4 years and 6 months to reach his savings goal of $50,000 with his current savings, annual contributions, and the given interest rate.