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8 February, 16:40

You expect to receive $11,000 at graduation in two years. You plan on investing it at 11 percent until you have $77,000. How long will you wait from now? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e. g., 32.16)) Number of years

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  1. 8 February, 17:33
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    20.65 years

    Explanation:

    The number of years for investing $11,000 at rate 11% to have $77,000

    PV: $11,000

    FV: $77,000

    Rate: 11%

    FV = PV * (1+rate) ^tenor

    ⇔ 77000 = 11000 * (1+11%) ^tenor

    ⇔ (1.11) ^tenor = 77000/11000 = 7

    we do the logarithm of number 7 base 1.11 to have tenor:

    Tenor = 18.65 years

    Together with 2 years waiting for graduation, you have to wait 20.65 yerars to have $77,000 from now.
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