How long will it take $3,000 to reach $5,000 when it grows at 7 percent per year?
A) 7.00 years
B) 7.55 years
C) 9.52 years
D) 10.29 years

Question

Quizplus · Accepted Answer

The formula to calculate the time it takes for an investment to grow is derived from the compound interest formula, which is A = P(1 + r)^t, where A is the amount of money accumulated after n years, including interest, P is the principal amount (the initial amount of money), r is the annual interest rate (decimal), and t is the time the money is invested for in years. Rearranging the formula to solve for t gives us t = log(A/P) / log(1 + r). Plugging in the values from the question gives us t = log(5000/3000) / log(1 + 0.07) = log(5/3) / log(1.07) ≈ 7.55 years.

How Long Will It Take $3,000 to Reach $5,000 When