Question

You expect to receive $9,000 at graduation in two years. You plan on investing it at 11 percent until you have $110,000. How long will you wait from now?

Answer 1

future value of amount = amount deposited*(1+r)^n

here,

future value of amount = $110,000

amount deposited = $9,000.

r = 11%=>0.11.

n = number of years , to be found out.

$110,000= $9,000*(1.11)^n

=>$110,000 / 9,000 = (1.11)^n

=>12.2222= (1.11)^n

apply logarithms

=> log (12.2222) = log (1.11)^n

=> log (12.2222)= n log (1.11)

=>1.08714939=n*0.04532298

=>n=23.986

=>24 years.

Total period 2 years from now to receive + 24 years to grow =>26 years.