Compound Interest Calculation: How Long to Reach $26,500 from $14,050?

QUESTION

How long does it take for $14,050 to grow to $26,500, if interest rates are set at 15.96%?

ANSWER

It takes approximately 4.54 years for $14,050 to grow to $26,500 with an interest rate of 15.96%.

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

Final Value = Principal * (1 + Interest Rate)^Time

Given:

Principal = $14,050

Final value = $26,500

Interest Rate = 15.96% (convert to decimal: 0.1596)

Time = ?

Using the formula and the given values:

$26,500 = $14,050 * (1 + 0.1596)^Time

After calculations to isolate Time:

Time ≈ 4.54 years

Therefore, it takes approximately 4.54 years for $14,050 to grow to $26,500 with an interest rate of 15.96%.