Question

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Mario wants to take a trip that costs $4,750, but currently he only has $2,260 saved. If Mario invests this money at 7 percent compounded annually, how long will it take for his investment to grow to $4,750?

Answer 1

We are given,

Future value(FV) = $4,750

Present Value(PV) = $2,260

Interest rare(r) = 7%

Time(t) = ?

We can calculate the time period by the following formula,

FV = PV * (1+r)^t

4750 = 2260 * (1+0.07)^t

4750/2260 = (1+0.07)^t

2.101 = (1+0.07)^t

Solving this equation we get t = 10.9783 or 11 years(approx)

Hence it will take 11 years approx to grow his investment from $2260 to $475 at 7%.

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