You expect to receive $11,000 at graduation in two years. You plan on investing it at 11 percent until you have $77,000. How long will you wait from now? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e. g., 32.16)) Number of years

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Business

Deandre Bishop

7 June, 08:17

You expect to receive $11,000 at graduation in two years. You plan on investing it at 11 percent until you have $77,000. How long will you wait from now? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e. g., 32.16)) Number of years

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Clayton · Answer 1

20.65 years

Explanation:

The number of years for investing $11,000 at rate 11% to have $77,000

PV: $11,000

FV: $77,000

Rate: 11%

FV = PV * (1+rate) ^tenor

⇔ 77000 = 11000 * (1+11%) ^tenor

⇔ (1.11) ^tenor = 77000/11000 = 7

we do the logarithm of number 7 base 1.11 to have tenor:

Tenor = 18.65 years

Together with 2 years waiting for graduation, you have to wait 20.65 yerars to have $77,000 from now.