Question

Number of Years: Mary Cooper, Sheldon’s mother, who lives in east Texas, wants to help pay for her grandchild’s education. How long will it take Mary to reach her goal of $200,000 if she invests $10,000 per year, earning 6 percent? Use Appendix A.3 or the Garman/Forgue companion website.

Answer 1

Mary Cooper will take approximately 11.895 years to reach her goal of $200,000.

Step-by-step explanation:

To calculate how long it will take for Mary Cooper to reach her goal of $200,000, we can use the formula for compound interest:

FV = PV * (1+r)^n

Where:

• FV is the future value (in this case, $200,000)
• PV is the present value (initial investment, $0)
• r is the interest rate (6% or 0.06)
• n is the number of years

Plugging in the values, we have:

$200,000 = $10,000 * (1+0.06)^n

Simplifying the equation, we get:

20 = (1.06)^n

To solve for n, we need to take the logarithm of both sides:

n = log(20) / log(1.06)

Using a calculator, we find that n is approximately 11.895 years.