You’ve been saving up to buy the Godot Company. The total cost will be $10 million. You currently have about $2.3 million. If you can earn 5 percent on your money, how long will you have to wait? At 16 percent, how long must you wait?

At 5 percent, you’ll have to wait a long time. From the present value equation:

At 16 percent, things are a little better. Verify for yourself that it will take about 10 years.

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$2.3 million $10 million/1.05¹ 1.05 = 4.35 t 30 years