Question

You have just inherited $560,000. You plan to save this money and continue to live off the money that you are earning in your current job. If you can invest the money in a bond that pays 5.46 percent interest annually, how long will it be before your inheritance is worth $1 million? (If you solve this problem with algebra round intermediate calculations to 5 decimal places, in all cases round your final answer to 2 decimal places, e.g. 8.72.)

Answer 1

10.64 years

Step-by-step explanation:

To find the number of years , use this formula :

FV / PV = (1 + r) ^n

FV = Future value = $1 million

P = Present value = $560,000.

R = interest rate = 5.6%

N = number of years

$1,000,000 / $560,000 = (1.056)^n

1.785714 = (1.056)^n

Find the In of both sides

n = 10.64 years