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To triple $1 million, Mika invested today at an annual rate of return of 9 percent. How long will it take Mika to achieve his goal?
- a)15.5 years
- b)13.9 years
- c)12.7 years
- d)10 years
Correct answer is option 'C'. Can you explain this answer?
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Verified Answer
To triple $1 million, Mika invested today at an annual rate of return ...
FV=PV(1+k)n
(3)(1,000,000)=1,000,000(1.09) n
ln(3)=(n)ln(1.09)
n=12.7 years
Or using a financial calculator (TI BAII Plus),
I/Y=9, PV= –1,000,000, PMT=0, FV=3,000,000, CPT N=12.7 years
(3)(1,000,000)=1,000,000(1.09) n
ln(3)=(n)ln(1.09)
n=12.7 years
Or using a financial calculator (TI BAII Plus),
I/Y=9, PV= –1,000,000, PMT=0, FV=3,000,000, CPT N=12.7 years
option "C"
Most Upvoted Answer
To triple $1 million, Mika invested today at an annual rate of return ...
Given:
Initial investment = $1 million
Target amount = $3 million
Annual rate of return = 9%
To find:
Time taken to achieve the target amount
Solution:
We can use the formula to calculate the future value of an investment:
FV = PV x (1 + r)n
Where,
FV = Future value
PV = Present value
r = Rate of return
n = Number of years
Substituting the given values, we get:
3,000,000 = 1,000,000 x (1 + 0.09)n
Dividing both sides by 1,000,000, we get:
3 = (1.09)n
Taking logarithms on both sides, we get:
n = log 3 / log 1.09
n ≈ 12.7 years
Therefore, it will take Mika approximately 12.7 years to achieve his goal of tripling his initial investment of $1 million at an annual rate of return of 9%.
Hence, the correct option is (c) 12.7 years.
Initial investment = $1 million
Target amount = $3 million
Annual rate of return = 9%
To find:
Time taken to achieve the target amount
Solution:
We can use the formula to calculate the future value of an investment:
FV = PV x (1 + r)n
Where,
FV = Future value
PV = Present value
r = Rate of return
n = Number of years
Substituting the given values, we get:
3,000,000 = 1,000,000 x (1 + 0.09)n
Dividing both sides by 1,000,000, we get:
3 = (1.09)n
Taking logarithms on both sides, we get:
n = log 3 / log 1.09
n ≈ 12.7 years
Therefore, it will take Mika approximately 12.7 years to achieve his goal of tripling his initial investment of $1 million at an annual rate of return of 9%.
Hence, the correct option is (c) 12.7 years.
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To triple $1 million, Mika invested today at an annual rate of return of 9 percent. How long will it take Mika to achieve his goal?a)15.5 yearsb)13.9 yearsc)12.7 yearsd)10 yearsCorrect answer is option 'C'. Can you explain this answer?
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