Answer:
E) $14.21 years
Explanation:
We need to find the number of years it will take your trust fund to reach $90,000.
To find out, we use this equation:
PV = FV (1 + i)^X
Where:
PV = Present value of money (in this case $45,000)
FV = Future value of money (in this case $90,000)
i = Interest rate
X = number of compounding periods (in this case, number of years)
Now, we plug the amounts into the equation and solve:
$45,000 = $90,000 (1 + 0.05)^X
$45,000/$90,000 = 1.05^X
0.5 = 1.05^X
Log0.5 = Log1.05X
X = Log0.5 / Log 1.05
X = 14.21
