Answer:
5.61 years
Explanation:
Let the Present value be 'x'
Data provided in the question:
Future value = [tex]\frac{3}{4}x[/tex]
Inflation rate, i = 5% = 0.05
Now,
Using the compounding
let number of years be n
thus,
Future value = Present value × [ 1 - inflation rate ]ⁿ
[tex]\frac{3}{4}x[/tex] = x × (1 - 0.05)ⁿ
or
0.75 = 0.95ⁿ
on taking log on both the sides , we get
or
log(0.75) = n × log(0.95)
or
-0.125 = n × (-0.0223)
or
n = 5.61 years
or, n = 11.89 years
