Question

When you were born, your parents opened an investment account in your name and deposited $1,500 into the account. The account has earned an average annual rate of return of 5.3percent. Today, the account is valued at $42,856. How old are you?

71.47 years

70.67 years

61.08 years

67.33 years

64.91 years

Answer 1

Future Value = Present Value * ( 1+ Rate) ^ Time

$ 42,856 = $ 1,500 * (1+5.3%) ^ Time Period

or $ 42,856 / $ 1,500 = (1.053) ^ Time Period

Let the time period be n years

or $ 42,856 / $ 1,500 = (1.053) ^ n

Taking log on both sides,

log ($ 42,856 / $ 1,500 ) = n log ( 1.053)

1.455920374= n 0.022428371

or n =1.455920374/ 0.022428371

= 64.9142268 Years

Hence the correct answer is 64.91 years

Answer 2

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