Stella is 16 years old. She earned $3,500 this year at a local ice cream shop, and another $3,500 in cash babysitting her neighb
2 answers:
You might be interested in
Solution :
Given :
James needs $ 1,000,000 after 15 years.
His IRA deposit is $ 200,000 and is earning at the rate of 8% per annum.
Maturity value of $200,000 after 15 years =
= $ 634,434.
Balance fund needed after 15 years = 1,000,000 - 634,434
= $ 365,566
Therefore, the future value of the annuity is :
Here, FV = future annuity value = 365,566
A = periodical investment
k = interest rate = 8%
n = period = 15 years
∴
A = 13,464
Thus, James needs to save $ 13,464 each year end to reach his target.