Question

You expect to receive $5,000 at graduation one year from now. Your plan is to invest this money at 6.5 percent, compounded annually, until you have $50,000. At that time, you plan to travel around the world. How long from now will it be until you can begin your travels?

Answer 1

Answer:

Approx 37 years.

Step-by-step explanation:

The compound interest formula is :

$A=P(1+\frac{r}{n})^{nt}$

Here, A = $50000

P = $5000

r = 6.5% or 0.065

n = 1

t = ?

Putting these values in formula we get;

$50000=5000(1+\frac{0.065}{1})^{1t}$

=> $50000=5000(1.065)^{t}$

=> $10=(1.065)^{t}$

Taking log on both sides;

$ln(10)=ln(1.065)^t$

=> $t=\frac{ln(10)}{ln(1.065)}$

We get t = 36.56 rounding to 37 years.