Suzy Douglas has been offered the opportunity of investing $73540 now. The investment will earn 8% per year and at the end of its life will return $200000 to Suzy. How many years must Suzy wait to receive the $200000?
A) 10
B) 11
C) 12
D) 13

Question

Quizplus · Accepted Answer

To find the number of years Suzy must wait to receive $200,000, we can use the formula for the future value of a single sum, which is $FV = PV(1 + r)^n$, where FV is the future value, PV is the present value, r is the annual interest rate, and n is the number of years. Rearranging the formula to solve for n gives us $n = \frac{\log(FV/PV)}{\log(1 + r)}$.Plugging in the values from the question:- $FV = $200,000$- $PV = $73,540$- $r = 8\% = 0.08$We get $n = \frac{\log(200000/73540)}{\log(1.08)}$.Calculating this gives us approximately 13 years.

Suzy Douglas Has Been Offered the Opportunity of Investing $73540