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Finance Oct 23, 2020

Sign into your account from another tab. 1) How much must be invested today, at 10% interest, to accumulate enough to retire a $100,000 debt due ten years from today? 2) If $5,000 is invested in a fund offering a rate of return of 10% per year, approximately how many years will it take for the investment to reach $10,000?

Expert Solution

1.) Calculation Of Present value

FV=PV(1+i)ⁿ

100000 = PV(1+10/100)¹⁰

PV=100000/(1+10/100)¹⁰

= 38554.33 (Effective)

2.) Calculation of No. of Year

FV=PV(1+i)n

10000=5000(1+10/100)ⁿ

10000/5000=(1.1)ⁿ

2=(1.1))ⁿ

log 2 =log (1.1))ⁿ

N=7.27 Years

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