Question

Kant Miss Company is promising its investors that it will double their money every 3 years. What annual rate is Kant Miss​ promising? Is this investment a good​ deal? If you invest ​$300 now and Kant Miss is able to deliver on its​ promise, how long will it take your investment to reach ​$26 comma 000​?

Answer 1

Answer:

Intructions are listed below.

Explanation:

Giving the following information:

Kant Miss Company is promising its investors that it will double their money every 3 years.

A) According to the rule of 70, an investment will duplicate in X number of years using the following formula:

N= 70/ interest rate

In this exercise:

3=70/i

i=70/3= 23.33%

B) If this is a good deal or not will depend on the interest rate and risk that you are willing to accept.

C) To find how many years it will take to reach to $26000 we need to use the following formula:

n=[ln(FV/PV)]/ln(1+r)

ln= natural logarithm

FV= Final value

PV= present value

r= interest rate

n=[ln(26000/300)]/ln(1+0,23333)

n= 21,55 years.