Suzy Douglas has been offered the opportunity of investing $73540 now. The investment will earn 8% per year and at the end of its life will return $200000 to Suzy. How many years must Suzy wait to receive the $200000?

A) 10
B) 11
C) 12
D) 13

Question

Ebony Williams · Accepted Answer

Final Answer : D, Explanation :   To find the number of years Suzy must wait to receive $200,000, we can use the formula for the future value of a single sum, which is   F V = P V ( 1 + r ) n FV = PV(1 + r)^n F V = P V ( 1 + r ) n  , where FV is the future value, PV is the present value, r is the annual interest rate, and n is the number of years. Rearranging the formula to solve for n gives us   n = log ⁡ ( F V / P V ) log ⁡ ( 1 + r ) n = \frac{\log(FV/PV)}{\log(1 + r)} n = l o g ( 1 + r ) l o g ( F V / P V ) ​  .Plugging in the values from the question:-   FV = $200,000  -   PV = $73,540  -   r = 8 % = 0.08 r = 8\% = 0.08 r = 8% = 0.08  We get   n = log ⁡ ( 200000 / 73540 ) log ⁡ ( 1.08 ) n = \frac{\log(200000/73540)}{\log(1.08)} n = l o g ( 1.08 ) l o g ( 200000/73540 ) ​  .Calculating this gives us approximately 13 years.

Suzy Douglas has been offered the opportunity of investing $73540 now. The investment will earn 8% per year and at the end of its life will return $200000 to Suzy. How many years must Suzy wait to receive the $200000?

A) 10
B) 11
C) 12
D) 13

Definitions

Learning Objectives

Learning Objectives

Related questions

Suzy Douglas has been offered the opportunity of investing $73540 now. The investment will earn 8% per year and at the end of its life will return $200000 to Suzy. How many years must Suzy wait to receive the $200000?A) 10B) 11C) 12D) 13

Definitions

Learning Objectives

Learning Objectives

Related questions

Suzy Douglas has been offered the opportunity of investing $73540 now. The investment will earn 8% per year and at the end of its life will return $200000 to Suzy. How many years must Suzy wait to receive the $200000?

A) 10
B) 11
C) 12
D) 13