You will receive $4,000 at graduation 3 years from now. You plan on investing this money at 5 percent annual interest until you have accumulated $50,000. How many years from today will it be when this occurs? (Provide an approximation using the tables or an exact number if using Excel)

It will take approximately 55 years

Explanation:

The future value of a lump sum is the amount expected at a future date when a sum of money is invested today at a particular rate of interest for certain number of years

FV = PV × (1+r)^(n)

FV= 50,000, PV = 4,000, n-?, r- 5%

50,000 = 4,000 × (1.05)^n

divide both sides by 4000

12.5 = 1.05^n

n= log 12.5/log 1.05

n = 51.8

The number of years = 51.8 + 3 years

                                  =54.767

Approximately 55 years

It will take 55 years

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