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# Calculating Time required to meet given financial targets

1. Time for a lump sum to double
If you deposit money today in an account that pays 6.5 percent annual interest, how long will it take to double your money?

2. Time to reach a financial goal-
You have \$ 42,180.53 in a brokerage account, and you plan to deposit an additional \$ 5,000 at the end of every future year until your account totals \$ 250,000. You expect to earn 12 percent annually on the account. How many years will it take to reach your goal?

3-Time for a lump sum to double -
How long will it take \$ 200 to double if it earns the following rates?
Compounding occurs once a year.
a. 7 percent.
b. 10 percent.
c. 18 percent.
d. 100 percent.

#### Solution Preview

Problem 1: If you deposit money today in an account that pays 6.5 percent annual interest, how long will it take to double your money?

Solution : Future value of a lump sum amount is given by
FV =PV(1+r/100)^n
Given FV/PV =2
r = 6.5%
so,
2 = (1.065)^t
t = 11.00674 years

Problem 2 : You have \$ 42,180.53 in a brokerage account, and you plan to ...

#### Solution Summary

There are three problems. Solutions describes the steps in finding the time required to meet the given financial goal.

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