Tim Howard has been offered the opportunity of investing $37,263 now. The investment will earn 7%...
Tim Howard has been offered the opportunity of investing $37,263 now. The investment will earn 7% per year and at the end of that time will return Tim $89,800.
How many years must Tim wait to receive $89,800?
Homework Answers
Given,
Present value (PV) = 37,263
Rate of interest (r) = 0.07
Future value (FV) = 89,800
Number of years (n) =?
Now by the formula as below:
FV = PV (1 + r) ^ n
89,800 = 37,263 (1 + 0.07) ^ n
(89,800 / 37,263) = 1.07 ^ n
2.409897 = 1.07 ^ n
n = [In (2.409897) / In (1.07)]
= 0.879584008 / 0.06765864847
= 13.000
Answer: 13 years
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