You need Rs. 10,000 to buy a new television. If you have Rs. 6,000 to invest at 5 percent compounded annually, how long will you have to wait to buy the television?
Correct answer: B. 10.51 years
- A. 8.42 years
- B. 10.51 years
- C. 15.75 years
- D. 18.78 years
Explanation
Use the compound-growth equation 6,000(1.05)^n = 10,000, which gives n approximately 10.5 years. Thus, option b is the closest listed value.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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