Question

Your mother just received a ​$340,461 inheritance. If she invests her money in a diversified equity portfolio returning 8 percent per​ year, approximately how long will it take her to become a​ millionaire?

Answer 1

Answer:

14 years

Explanation:

The future value of an investment is given by the following equation:

$F = P*(1+r)^t$

If your mother is investing an amount of P=$340,461 at a rate r=0.08 and the desired future value is F=$1,000,000, the required time of investment 'n', in years, is:

$1,000,000 = 340,461*(1+0.08)^n\\log(\frac{1,000,000}{340,461})=n*log(1.08)\\ n=14\ years$

It will take her 14 years to become a millionaire.