If for the next 30 years you place $2,000 in equal year-end-deposits into an acc

Question

If for the next 30 years you place $2,000 in equal year-end-deposits into an account earning 5% per year, how much money will be in the account at the end of that time period?

Sundial Resorts' new chief Marketing officer has pledged to increase sales form its current level os 1.25 million at a rate of 5% per year until the firm hits sales of 2.75 million. How long will it take to hit the target goal at this rate of increase?

A. a little less than 16 years

B. a little more than 16 years

C. between 14 and 15 years

D. between 11 and 12 years

Explanation / Answer

1.Time ( n) = 30
rate = 5%
Annuity = 2500
FV = Annuity * ((1+r)n -1) /r = 2500* ((1+5%)30-1)/5% = 166097.12

2. PV=1.25
Fv = 2.75
Rate = 5%
FV = PV * (1+5%)n
2.75 = 1.25 * 1.05n
2.75/1.25 = 1.05n
applying log on both sides we get
n = log (2.75/1.25)/log(1.05) = 16.16 years
Option b is correct.

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