Faisal has $15,000 in his savings account and can save an additional $5000 per year.If interest rates are 12%,how long will it take his savings to grow to $50,000?
A) years
B)3 years
C) years
D)5 years
E)4 years

Question

Faisal has $15,000 in his savings account and can save an additional $5000 per year.If interest rates are 12%,how long will it take his savings to grow to $50,000?
A) years 
B)3 years 
C) years 
D)5 years 
E)4 years

Quizplus · Accepted Answer

Let the number of years be x.
Using compound interest formula, we have:
15000(1+0.12)^x + 5000[((1+0.12)^x - 1)/0.12] = 50000
Simplifying, we get:
1.12^x = 2
Taking log on both sides, we get:
x = log 2 / log 1.12
x ≈ 11.02
Hence, it would take approximately 11 years for Faisal's savings to grow to $50,000. The closest option is C, which is 11 years.

Faisal Has $15,000 in His Savings Account and Can Save