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Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
ISBN: 9781285867977

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BuyFindarrow_forward

Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
ISBN: 9781285867977
Textbook Problem

TIME TO REACH A FINANCIAL GOAL You have $42,180.53 in a brokerage account, and you plan to deposit an additional $5,000 at the end of every future year until your account totals $250,000. You expect to earn 12% annually on the account. How many years will it take to reach your goal?

Summary Introduction

To determine: The time required to reach the financial goal.

Future value:

Future value is the amount of a current asset at a certain point of time in the future, which has been accumulated at an assumed rate of growth.

Explanation

Given information:

Present value (PV) is $42,180.53.

Rate of interest (r) is 12%.

Future value (FV) is 250,000.

Payment (Pmt) amount made at the end of the every year is $5,000.

Required formula:

FV=Pmt((1+r)n1)r+PV(1+r)n

Here, n is the time

Calculation:

Substitute the respective values in the formula.

250,000=5,000((1+0.12)n1)0

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