AuthorTopic: simple one
@2007-07-01 16:54:14
hi everyone,

this one should be easy:

I have $35000 to deposit, interest is 5% compounded monthly. How long till it reaches $100,000.
I know I need to use the fv = pv (1+r/m)mN.
and solve for N.
However i can not remeber how to solve for N?

Any ideas?
@2007-07-24 22:18:43
Using the formula:

fv = pv (1+r/m)mN


fv / pv = (1+r/m)mN


log (fv/pv) = Log ((1+r/m)mN)= mN Log(1+r/m)


N = Log(fv/pv)/(m*Log(1+r/m))
(use Log or ln or whatever)


N = Log(100/35)/(12*Log(1+0.05/12))

=0.455932/0.021670 = 21.04years
@2007-08-07 12:53:36
Or you could simply use your calculator (this assumes you are using an HP) since you'll need to know how to use it to gain some time on the exam.
Set up pv=(35k); FV=100k; I= .41667(5/12); then solve for n. And you should get something close to n= 21.08. Just remember the hp assumes one of your cash flow is negative, so you need to set up either PV or FV as negative in order to avoid getting an error message. Hope it helps!

CFA Discussion Topic: simple one

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