Question

ou expect to receive $10,000 at graduation in two years. You plan on investing it at 9 percent until you have $60,000. How long will you wait from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

Answer:

22.79 years(Approx).

Explanation:

We use the formula:

$A=P(1+\frac{r}{100})^{n}$

where

A=future value

P=present value

r=rate of interest

n=time period.

$60,000=10,000(1.09)^{n}$

$\frac{60,000}{10,000}=(1.09)^{n}$

$6=(1.09)^{n}$

Taking log on both sides

log 6 = (n × log 1.09)

n = log 6 ÷ log 1.09

= 20.79 years

Hence,

The time to wait from now:

= 20.79 years + 2 years

= 22.79 years(Approx).