Question

# Show the work with formulas. - How many years will it take for \$100,000 to grow...

Show the work with formulas.

- How many years will it take for \$100,000 to grow to \$500,000 if it is invested at an annual interest rate of 9.15%? Round to the nearest 0.01.

- You are told that if you invest \$5,000 per year for 35 years you will have accumulated \$1,000,000. What is the annual rate of return on the latter investment? Round to the nearest 0.01%.

We will use TVM formula which is as follows-

Future Value = Present value*((1+interest rate)^time)

Question

We need to find how much time will it take for 100,000 to grow to 500,000 if invested at 9.15%

\$500,000 = \$100,000*((1+9.15%)^time)

Solving for time we get

Time = 18.38 years

Question

We need to the interest rate in this-

\$1,000,000 = (\$5000/((1+r)^1) + (\$5000/((1+r)^2) + (\$5000/((1+r)^3) +......+ (\$5000/((1+r)^34) + (\$5000/((1+r)^35)

Solving for r

We get r = 8.66%

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