Question

6. How many years will it take $500 to grow to $1,586 if it is invested at 8% compounded annually?
   

Answer 1

Future value = present value * (1 + interest rate)^{number of years}

Here, the future value is the ending amount, which is $1,586.

The present value is the amount invested today, which is $500.

Let us say the number of years invested is N. Then :

$1,586 =  $500 * (1 + 8%)^N

1.08^N = (1,586 / 500)

N = log_1.08(1,586 / 500)

N = 15

It will take 15 years for $500 to grow to $1,586 if invested at 8% compounded annually.