Present Value of 1 Future Value of 1 Present Value of an Annuity of 1 Future Value of an Annuity of 1 How long will it take an investment of $25,000 at 6% compounded annually to accumulate to a total of $35,462.50?
A)4 years
B)5 years
C)6 years
D)2 years
E)10 years

Question

Present Value of 1  Future Value of 1  Present Value of an Annuity of 1  Future Value of an Annuity of 1  How long will it take an investment of $25,000 at 6% compounded annually to accumulate to a total of $35,462.50?
A)4 years 
B)5 years 
C)6 years 
D)2 years 
E)10 years

Quizplus · Accepted Answer

Using the formula for future value:

FV = PV x (1 + r)^n

where FV is the future value, PV is the present value, r is the annual interest rate, and n is the number of years.

Substituting the given values:

35,462.50 = 25,000 x (1 + 0.06)^n

Simplifying the equation:

1.4185 = 1.06^n

Taking the logarithm of both sides:

log 1.4185 = n log 1.06

n = log 1.4185 / log 1.06

n ≈ 5.997

Therefore, it will take approximately 6 years for the investment to accumulate to $35,462.50.