If P Dollars Are Invested at the End of Each $$n = \frac { \log \left[ \frac { A r } { p } + 1 \right] } { \log ( 1 + r ) }$$

question 69

Multiple Choice

If P dollars are invested at the end of each year in an annuity that earns interest at an annual rate r, the amount in the account will be A dollars after n years, where $$n = \frac { \log \left[ \frac { A r } { p } + 1 \right] } { \log ( 1 + r ) }$$ If $2,600 is invested each year in an annuity earning 14% annual interest, when will the account be
Worth $30,000?

• A)2.7 years
• B)7.3 years
• C)11.5 years
• D)3.7 years
• E)16.9 years

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Definitions:

Retained Earnings Account

An equity account that represents the accumulated profits of a company that have not been distributed to shareholders as dividends.

Income Statement Account

An income statement account is a financial account that reflects income, expenses, gains, and losses over a period, used to calculate net income.

Stock Dividend

A distribution of additional shares of a company to its shareholders instead of paying cash dividends, often used to conserve cash while still rewarding investors.

Par Value

The nominal or face value of a bond, stock, or coupon as stated by the issuer, which often bears no relation to its market value.