Question

Invest $10,000 today to get $20,000 in 20 years. is it good deal?

compare Future value and Present value and clearly answer

Answer 1

Future value = present value * ( 1 + yield)^number of year

20000 = 10000 * (1 + yield)^20

(1 + yield)^20 = 2

20 * log(1 + yield) = .693147

log(1 + yield ) = .034657

(1 + Yield) = e^.034657

(1 + yield) = 1.035265

yield = 1.035265 - 1

Yield = 3.5265%

This yield is very less thus it is not looking very good investment deal or idea.

One should look into the yield while investing in the product thus if yield is very less than it is not making any sense to enter into the deal.