You decide you want your child to be a millionaire.You have a son today and you deposit $10,000 in an investment account that earns 7% per year.The money in the account will be distributed to your son whenever the total reaches $1,500,000.How old will your son be when he gets the money (rounded to the nearest year)?
A) 82 years
B) 74 years
C) 60 years
D) 49 years

Question

Quizplus · Accepted Answer

To calculate this, we need to use the formula for compound interest: 
A=P(1+r/n)^(nt), where A is the amount in the account, P is the initial deposit, r is the interest rate, n is the number of times interest is compounded per year, and t is the number of years. 
Plugging in the given values, we get: 
1,500,000 = 10,000(1+0.07/1)^(1t) 
Taking the natural logarithm of both sides: 
ln(150) = t ln(1.07) 
t = ln(150) / ln(1.07) 
t ≈ 73.95 
Rounding to the nearest year, the answer is 74 years.

You Decide You Want Your Child to Be a Millionaire