You will receive $4,000 at graduation 3 years from now. You plan on investing this money at 5 percent annual interest until you have accumulated $50,000. How many years from today will it be when this occurs? (Provide an approximation using the tables or an exact number if using Excel)

Question

Jaydin Cline

Business

7 August, 08:08

You will receive $4,000 at graduation 3 years from now. You plan on investing this money at 5 percent annual interest until you have accumulated $50,000. How many years from today will it be when this occurs? (Provide an approximation using the tables or an exact number if using Excel)

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Answers (1)

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Ronnie Palmer · Answer 1

It will take approximately 55 years

Explanation:

The future value of a lump sum is the amount expected at a future date when a sum of money is invested today at a particular rate of interest for certain number of years

FV = PV * (1+r) ^ (n)

FV = 50,000, PV = 4,000, n-?, r - 5%

50,000 = 4,000 * (1.05) ^n

divide both sides by 4000

12.5 = 1.05^n

n = log 12.5/log 1.05

n = 51.8

The number of years = 51.8 + 3 years

=54.767

Approximately 55 years

It will take 55 years