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Question 12 Assuming a discount rate of 7.25%, in how many years time will R7 000 be worth R20 000? (1) 9 years (2) 10 years

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Answer #1

Present value = Future value/(1+i)^n

i = interest rate per period

n= number of periods

=>

7000 * (1+7.25%)^n = 20000

=>

Number of years n = ln(20000/7000)/ln(1+7.25%)

= 15 years

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