Chris is investing $39,205 at the end of each year in a fund that earns 8%...

Question

Question

Chris is investing $39,205 at the end of each year in a fund that earns 8% interest.

In how many years will the fund be at $230,000?

business finance

Answer 1

Answer #1

Future value of annuity=Annuity[(1+rate)^time period-1]/rate

230,000=39205[(1.08)^time period-1]/0.08

230,000=490062.5[(1.08)^time period-1]

[(1.08)^time period-1]=230,000/490062.5

(1.08)^time period=(230,000/490062.5)+1

Taking log on both sides;

time period*log 1.08=log 1.46932789

time period=log 1.46932789/log 1.08

=5 years.

Answer 2

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