Engineering Economy

Q4.30:

We know:

The future value Luis is aiming for is $2,000,000

Annuity = $10,000 per year

The interest: i = 10%

Finding N?

We have:

( 1+i ) N −1
F = A (F/A, i%, N) = A [ ]
i

(1+0,1)N −1
$2,000,000 = $10,000[ ]
0,1
$ 2,000,000
So 1,1N = [ (0,1)] + 1 = 21
$ 10,000
Log (1,1N ) = log21

log 21
Hence, N = = 31, 9433 ~ 32
log 1,1
Therefores, the amount of time before Luis can retire as a multi – millionaires is 32 years.