   Chapter 5, Problem 5P ### Fundamentals of Financial Manageme...

9th Edition
Eugene F. Brigham + 1 other
ISBN: 9781305635937

#### Solutions

Chapter
Section ### Fundamentals of Financial Manageme...

9th Edition
Eugene F. Brigham + 1 other
ISBN: 9781305635937
Textbook Problem
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# TIME TO REACH A FINANCIAL GOAL You have \$33,556.25 in a brokerage account, and you plan to deposit an additional \$5,000 at the end of every future year until your account totals \$220,000. You expect to earn 12% annually on the account. How many years will it take to reach your goal?

Summary Introduction

To determine: Thenumber of years it will take to reach the goal.

Introduction:

PresentValue:

The present value is the current value by which the future value of the annuity is determined. The calculation of the future value depends on the present value, which is calculated using a discount rate.

Future Value:

The future value means the value of the investment, which will be realized in the future. With the help of the calculation of future value, an analysis of the amount to be invested can be made. This is very useful for the financial users and investors.

Explanation

Given information:

The amount present in the account is \$33,556.25.

The amount to be deposited at the end of every year is \$5,000.

The interest rate is 12% annually.

The expected future value is \$220,000.

Calculation of the number of years:

The number of months is calculated using excel ‘NPER’ function.

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