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If $4,000 is invested at 7% compounded annually. How long will it take for it to grow to $6,000, assuming no withdrawals are made?

Question

If $4,000 is invested at 7% compounded annually. How long will it take for it to grow to $6,000, assuming no withdrawals are made?

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Step 1

To solve the question, we need to use the concept of time value of money. According to the concept of time value of money, the value of money available at the present time is more compared to the same amount at some future time. This is because of the earning potential of money, we can earn interest on the money by investing it. The formula used for the time value of money is:

Step 2
Future value=Present valuex(1+Rate of return)Number of years
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Future value=Present valuex(1+Rate of return)Number of years

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Step 3

Given that the future value is $6000, present value is $4000 and rate of return is 7%, supp...

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