Ramesh earns 5% on a $7,500 investment compounded annually. how long will it take for the investment to reach $50,000? compound yearly formula: f(t) = a × (1+b)t

The investment takes 39 years approx to become $50000.

What is the meaning of Compounded annually?

A way to calculate interest and apply it to a loan or investment once a year rather than over several months or years.

Given,

Rate (r)= 5%

Future Value (FV) = $50,000

Present Value (PV) = $7,500

Required to Calculate Time (n)=?

                    FV = PV ( 1 + r)ⁿ

                 50,000 = 7,500 ( 1 + 0.5)ⁿ

                   Log 6.667 = Log ( 1.05)ⁿ  

                    n = 38.88 Years which is approx 39 years.

Thus, the investment needs 39 years approx to become $50,000.

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