Question

Two years ago, Tim invested $13900. In four years from today. he expects to have $25100. If Deshaun expects to earn the same annual return after four years from today as the annual rate implued from the past and expected alues given in the problem, then in how many years from today does he expect to have exactly $34700?

Answer 1

Calculation of rate of return
PV= FV/(1+r)^n
Where,
FV= Future Value
PV = Present Value
r = Interest rate
n= periods in number
$13900= $25100/( 1+r)^6
13900/25100 =1/(1+r)^6
0.553785 =1/(1+r)^6
r=10.3511%
Calculation of number of years rquired to become $34700
PV= FV/(1+r)^n
Where,
FV= Future Value
PV = Present Value
r = Interest rate
n= periods in number
13900= $34700/( 1+0.103511)^n
n = 9.29 years
Number of years from today = 9.29- 2
=7.29 years