Answer: 18 years
Explanation: The formula for calculating the number of periods is
n = log ( [tex]1-\frac{PV(r)}{P} ^{-1}[/tex]) / Log (1+r)
PV = $1,100,000
P = 95,000
r = 0.05122
log is the natural logarithm (you will find it on your calculator as log or on Excel as LN( )
n = log ( [tex]1-\frac{1100000(0.05122)}{95000} ^{-1}[/tex]) / Log (1+0.05122)
= log ( [tex]1-\frac{56342}{95000} ^{-1}[/tex]) / log (1.05122)
= log ( [tex](1 - 0.59307)^{-1}[/tex]) / log (1.05122)
= log [tex](0.40693)^{-1}[/tex] / log (1.05122)
= log 2.4574 / log (1.05122)
= 17.99 years
Approximately 18 years
