Answer:
It will take 10 years to have $20,000 on investment of $10,000.
Explanation:
Annual Rate of return = r = 7%
Compounded Value / Future Value = FV = $20,000
Investment Value / Present Value = PV = $10,000
Use Future value formula to solve this question:
Future Value = Present Value x ( 1 + Number of Year )^Number of year
FV = PV x [tex]( 1 + r )^{n}[/tex]
$20,000 = $10,000 x [tex]( 1 + 0.07 )^{n}[/tex]
[tex]\frac{20,000}{10,000}[/tex] = [tex]( 1 + 0.07 )^{n}[/tex]
$2 = [tex]1 .07 ^{n[/tex]
Log 2 = n log 1.07
0.30 = n x 0.03
n = [tex]\frac{0.30}{0.03}[/tex]
n = 10.00
n = 10 year (rounded off to nearest year )
It will take 10 years to have $20,000 on investment of $10,000.
