You expect to receive $33,000 at graduation in two years. You plan on investing it at 9.75 percent until you have $168,000.?

Question

i keep finding 17.49 years but apparently that is incorrect

Answer 1

When you say 9.75%, is this an annual rate compounded annually with no withdrawals??

Assuming so, we have:

168000 = 33000 x 1.0975ᵗ

i.e. 1.0975ᵗ = 168000/33000 => 56/11

so, tlog(1.0975) = log(56/11)

=> t = log(56/11)/log(1.0975)

Hence, t = 17.49 years....I agree

:)>  

Answer 2

I have a few problems with this question.

1)  Is there a question?  ("How long will it be?")

2)  The rate quoted is presumably p.a.; but compounded at what interval?

Annually gives 17.49 years (?plus 2 years).

Monthly gives 16.76 years.

Weekly gives 16.71 years.

Do these figures help?

Answer 3

I also get 17.49, perhaps its incorrect because you have to add the 2 years that you have to wait to get the money, so the correct answer would be 19.49, I hope thats correct. 

Source(s): Excel

Answer 4

I use it to buy gold, and in 17 years it's worth over $300,000.