Finance????

Sven Smorgasbord is 35 years old is presently experiencing the “good” life. As a result, he anticipates that he will increase his weight at a rate of 3 percent a year. At present he weighs 200 pounds. What will he weigh at age 60?

Finance????
The answer is 418.76 pounds.





Ok. This is a %26#039;fairly%26#039; simple growth question. The formula I%26#039;m using is for compound growth which I%26#039;m sure you%26#039;ve heard of, as you put this question in the right section. (Compound growth is used most in finance). This is how the formula looks:





FV = PV ( 1+i )^n





Where FV is future value (his future weight which is what you want). %26#039;i%26#039; is the growth rate. 3% growth means i will be 0.03. And n is the number of years he%26#039;ll grow over, which is 60-35 = 25 years old. For this question the formula could be worded as:





Weight, multiplied by ((1+percentage growth) to the power of number of years he%26#039;ll be growing).





= 200*(1.03^25)





The answer is 418.76 pounds.





To help you understand. If you%26#039;re growing by 3 percent a year. then next year you will be 1.03 multiplied by the weight you are now. This would be 200 * 1.03





His weight in two years would be 200 * 1.03 (the weight after the first year) which will then grow by 1.03, so the above bit needs to be multiplied by another 1.03. So in two years he%26#039;ll be 200*1.03*1.03 or 200*1.03^2. You%26#039;ll notice the power is simply the number of years he%26#039;s been growing. After three years would be 200*1.03^3.








So it ends up being 200* (1.03 to the power of 25)





Good luck with any other questions.