Question

Step 1

Let's say we have to wait for** n years once you get the money at graduation**, which itself is two years from now.

Sum of money that your will receive at graduation = PV = $ 25,000

Target future value, FV = $ 150,000

Annual rate of return, r = 9%

Step 2

So, the connecting equation is:

FV = PV x (1 + r)^{n}

Hence, 150,000 = 25,000 x (1 + 9%)^{n}

Hence, 1.09^{n} = 150,000 / 25,000 = 6

Step 3

Take log to the base "e" on both the sides,

n ln (1.09) = ln (6)

Hence,...

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