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Kazeer [188]
3 years ago
15

You just inherited ?$12 comma 00012,000. while you plan to squander some of it? away, how much should you deposit in an account

earning 44?% interest per year if? you'd like to have ?$12 comma 00012,000 in the account in 88 ?years?
Business
1 answer:
soldier1979 [14.2K]3 years ago
6 0
44% annual interest sounds too good to be true, but we'll work with it.
Don't know exactly how much is <span>$12 comma 00012,000.
I will work with $1,000,000  (one million).  You can scale the results to the right amounts.

Future value = $1,000,000
i=0.44 
n=88
Present value=$1,000,000/(1+0.44)^88=$1.159*10^(-8), not even one cent!

However, if the interest rate is 4% for 88 years (more likely), then
Present value=F/(1.04^88)=1,000,000/1.04^88=$317,000.50.
That's the amount you need to put in today to get $1000000 in 88 years at 4% APR (compounded annually).</span>
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