Question

Suppose you deposit $1,056.00 into an account 7.00 years from today that earns 12.00%. It will be worth $1,842.00 _____ years from today. (rounded to 2 decimal places)

Answer 1

Solution

Step 1 : Time require from 1056 to 1842

Formula

Present Value = Future Value / ( 1+r )n

=> 1056 = 1842 / ( 1+0.12 )n

=> ( 1.12 )n = 1.74432

Applying log both sides

=> Log[( 1.12 )n ] = log (1.74432 )

As per log property, log (xn) = n * Log x

=> n * Log[1.12] = log (1.74432 )

=> n = log[1.74432] / Log[1.12]

As per the log table

=> n = 0.24163 / 0.04922

=> n = 4.91 years

Step 2 Answer

It will take 4.91 years to convert 1056 to 1842 from 7th year.

Thus from today it will take 7 + 4.91 = 11.91 years. Answer

Hope you understand the solution