You currently have $6,300 (Present Value) in an account that has
an interest rate of 5% per year compounded annually (1 times per
year). You want to withdraw all your money when it reaches $12,600
(Future Value). In how many years will you be able to withdraw all
your money?
Here we will use the following formula:
FV = PV * (1 + r%)n
where, FV = Future value = $12600, PV = Present value = $6300, r = rate of interest = 5%, n= time period
now, putting theses values in the above equation, we get,
$12600 = $6300 * (1 + 5%)n
$12600 / $6300 = (1 + 0.05)n
2 = (1.05)n
(1.05)14.25 = (1.05)n
n = 14.25
So, it will take 14.25 years.
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