You’re trying to save to buy a new $245,000 Ferrari. You have $50,000 today that can be invested at your bank. The bank pays 4.6 percent annual interest on its accounts. How long will it be before you have enough to buy the car?
You’re trying to save to buy a new $245,000 Ferrari. You have $50,000 today that can be invested at your bank. The bank pays 4.6 percent annual interest on its accounts.
How long will it be before you have enough to buy the car?
Future value is the amount that you will receive in the future after your investments have grown at a particular rate of interest. Present value is the amount invested at present in order to receive a specific amount in the future.
In order to calculate the number of years required for the present amount to grow up to a specific future amount, the following formula is used:
n = [log (FV / PV)] / [log (1 + r)]
where FV is Future Value
PV is Present Value
r is the Rate of interest
n is the Number of years
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