Question

If Randy invests $15,000 at a 9% interest

Answer 1

It will take 8.04 years for the initial investment of $15000 to become $30,000

What is the future value of an investment?

The future value of $15,000 invested now earning a rate of return of 9% per year is $30,000, it the future equivalent of an amount invested now when the invested amount has earned interest over a specific period of time.

The below future value formula of single cash flow can be used to determine the number of years it takes for the initial investment to double.

FV=PV*(1+r)^N

FV=future value=$30,000

PV=initial investment=$15,000

r=rate of return=9%

N=number of years it takes for the initial investment to double=unknown(assume it is X)

$30,000=$15000*(1+9%)^N

$30000/$15000=(1+9%)^N

2=1.09^N

take log  of both sides

ln(2)=N*ln(1.09)

N=ln(2)/ln(1.09)

N=8.04 years

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