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2 September, 03:56

You will receive $4,000 at graduation 3 years from now. You plan on investing this money at 5 percent annual interest until you have accumulated $50,000. How many years from today will it be when this occurs? (Provide an approximation using the tables or an exact number if using Excel)

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  1. 2 September, 06:04
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    It will take approximately 55 years

    Explanation:

    The future value of a lump sum is the amount expected at a future date when a sum of money is invested today at a particular rate of interest for certain number of years

    FV = PV * (1+r) ^ (n)

    FV = 50,000, PV = 4,000, n-?, r - 5%

    50,000 = 4,000 * (1.05) ^n

    divide both sides by 4000

    12.5 = 1.05^n

    n = log 12.5/log 1.05

    n = 51.8

    The number of years = 51.8 + 3 years

    =54.767

    Approximately 55 years

    It will take 55 years
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