question archive After taking her FIN325 class Maria decided to invest $5000 after she graduates in 2 years
After taking her FIN325 class Maria decided to invest $5000 after she graduates in 2 years
Subject:FinancePrice:2.86 Bought3
After taking her FIN325 class Maria decided to invest $5000 after she graduates in 2 years. She hopes that she can gain 15% interest rate on her investment. How long does she need to wait from today until her money grows to $15000?
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We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.
15000=5000*(1.15)^n
(15000/5000)=(1.15)^n
3=(1.15)^n
Taking log on both sides;
log 3=n*log (1.15)
n=log 3/log (1.15)
=7.86 years(Approx)
Hence time to wait from today=7.86+2
=9.86 years(Approx)
