You expect to recieve $15,000 at graduation in two years. You plan on investing in at 9% until...

Question:

You expect to recieve $15,000 at graduation in two years. You plan on investing in at 9% until you have $75,000. How long will you wait from now?

Future value

Future value is the value of the assets or investment or amount to be received at a predetermined interest rate after a specific time.

The future value is the discounted value of present cash flows in today's dollars.

Answer and Explanation:

In this question we are given with the future and present values along with rate, and have to to find the number of years, we know

Future value = P*(1+r)^n

P is payment

r is interest rate per period

n is number of periods

$75,000 = $15,000*(1+9%)^n

n = 18.68 years nearly

So total time = 18.68+ 2 = 20.68

Hence, 20.68 years from now


Learn more about this topic:

How to Calculate Future Value: Formula & Example

from Financial Accounting: Help and Review

Chapter 5 / Lesson 16
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