Question

Peter Lynch said with 30% annual rate from the market, you would soon own half of the country. How soon? Use U.S. GDP, which is about $16 trillion, as an estimate and half of it is $8 trillion. We start our investment with $10,000.

Answer 1

Here PV = Present value = $10000 , FV = Future value = $8,000,000,000,000 , n = no of years = ? , r = rate of interest = 30%

FV = PV(1+r)^n

8,000,000,000,000 = 10000(1+30%)^n

800,000,000 = (1.3)^n

Assume n = 78

1.3^78 = 771936328.43 $

Anow assume n = 79

1.3^79 = 1003517226.96 $

using interpolation , one can find n

n	1.3^n
78	771936328.43
79	1003517226.96
1	231580898.53
?	28063671.57

= 28063671.57/231580898.53

= 0.12

Thus n = 78 + 0.12 = 78.12 years