Question

You expect to receive $17,000 from your godmother at graduation in two years. You plan to invest the gift in the Transylvanian Bank & Loan which pays 10 percent annually on deposits. You'll leave your money in the bank until you have $92,000. How long will you have to wait from now before you reach that target amount? (Do not round your intermediate calculations.) Multiple Choice O 1772 years O 21.69 years O 19.72 years O O 15.72 years

Answer 1

Answer: 19.72 years

Explanation

Let number of years = "n"

Future Value = Present Value x (1 + r)^n

$92,000 = 17,000 x (1.10)^n

n = In($92,000 / $17,000) / ln 1.10   

n = 17.72 years

From now, you’ll wait 2 + 17.72 = 19.72 years