USA: +1 (725) 712-1730
USA: +1 (725) 712-1730

Question & Answer: His money market fund has a balance of $197,845 and has a guaranteed interest rate of 10%. How man…..

Exercise 6-10 (Part Level Submission)

Consider the following independent situations. (Use the tables below.)
Collapse question part

(a)

Mike Finley wishes to become a millionaire. His money market fund has a balance of $197,845 and has a guaranteed interest rate of 10%. How many years must Mike leave that balance in the fund in order to get his desired $1,000,000?

years

Expert Answer

 

Current balance = Present value = $197,845

Money required at the end of n years = Future value = $1,000,000

Interest rate = r = 10%

Future value = Present value*(1+r)n

$1,000,000 = $197,845*1.10n

1.10n = $1,000,000/$197,845 = 5.05446

n.log1.10 = log5.05446

n = log5.05446/log1.10 = 0.70367/0.04139 = 16.9999 = 17

Hence, answer is 17 years

Still stressed from student homework?
Get quality assistance from academic writers!
Order now