Question

You expect to receive $9,000 at graduation in two years. You plan on investing it at 8 percent until you have $99,000. How long will you wait from now? Multiple Choice A)33.16 years B)37.14 years C)31.16 years D)29.16 years E) 36.47 years

Answer 1

To have $99,000 from an initial investment of $9,000 at an 8% interest rate, you will need to wait approximately 36.47 years.

Step-by-step explanation:

To find out how long you need to wait to have $99,000 from an initial investment of $9,000 at an 8% interest rate, we can use the formula for compound interest:

Future Value = Principal x (1 + Interest Rate)^Time

Plugging in the values, we have:

$99,000 = $9,000 x (1 + 0.08)^Time

Simplifying the equation:

(1 + 0.08)^Time = $99,000 / $9,000

Dividing the right side of the equation:

(1 + 0.08)^Time = 11

Next, we take the logarithm of both sides to solve for Time:

Time = log(11) / log(1 + 0.08)

Calculating the value:

Time ≈ 36.47 years