suppose you owe a creditor $10,000 due in a single payment in 5 years. how much should your creditor be willing to accept now if

Question

1 year ago

14

he can earn 8% on his money?

1 answer:

adelina 88 [10] · Answer 1 · 2024-04-27T22:22:42+03:00

To calculate the worth that a creditor should be helpful to accept now, we ought to solve the equation:

X=10,000/1.085

<h3>Solving for X.</h3>

This equation shows the parity of X and the present significance of $10,000 5 years from now using a rate of 8%.

Solving for X.

X=10,0001.4693

X= 6,805.83 X= 6,805.83

The creditor should be willing to accept $6,805.83 now in exchange for future payment of $10,000 5 years from now

we need to solve the equation:

200,000 = 100,000 × 1.07 x 200,000 = 100,000 × 1.07x

where x is the numeral of years it will bear to double the $100,000 asset (= $200,000 )

Decoding for X.

200,000

100,000 = 1.07x= 2200,000

100,000 = 1.07x= 2

x × log1.07 = log2x × log1.07 = log2

x = log2 log1.07 x= log2 log1.07

x=0.30100.029

4 x= 0.30100.0294

x =10.2448 x=10.2448

It will take 10.2448 years for a $100,000 investment to double with 7% annual interest.

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