Question

You have $10,000 to be invested at 8% annually. Your goal is to reach $20,000 for a vacation in Europe. Approximately how many years will it take you to reach your goal

Answer 1

It will take 9 years.

Step-by-step explanation:

Giving the following information:

Future Value (FV)= $20,000

Present Value (PV)= $10,000

Interest rate (i)= 8%

To calculate the number of years required, we need to use the following formula:

n= ln(FV/PV) / ln(1+i)

n= ln(20,000/10,000) / ln(1.08)

n= 9

It will take 9 years.

Prove:

FV= PV*(1+i)^n

FV= 10,000*(1.08^9)

FV= $19,990