How long will it take $400 to reach $800 if the interest rate = 8%? How long wil

Question

How long will it take $400 to reach $800 if the interest rate = 8%? How long will it take $400 to reach $1600 at that interest rate?

Suppose you have $2200 today. The interest rate is 5%. What is the future value of this amount in 10 years?

Suppose you make a $2200 deposit into an account at the end of each year for 10 years. The interest rate is 5%. What is the future value of your money?

How much is $2200, paid to you in 10 years, worth to you today if the interest rate is 5%?
BONUS: Does this change if interest rates go up to 8%? What is your new answer?

Explanation / Answer

1)

Future value=present value*(1+r)^n

800=400*(1+8%)^n

1.08^n=2

take natural log on both sides

n=LN(2)/LN(1.08)

=9.01 or 9 years

2)

Future value=present value*(1+r)^n

1600=400*(1+8%)^n

1.08^n=4

take natural log on both sides

n=LN(4)/LN(1.08)

=18.01 or 18 years

3)

future value of this amount in 10 years

=2200*(1+5%)^10

=3583.57

4)

future value of your money=2200*(((1+5%)^10-1)/5%)=27671.36

5)

worth to you today=2200/(1+5%)^10=1350.61

worth to you today at 8%=2200/(1+8%)^10=1019.03

the above is answer..

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