Hyun just turned 25 today. by her 60th birthday she would like to have $1,000,000 saved. she plans to invest equal annual paymen
ts beginning with her 26th birthday and ending on her 60th birthday. if all invested funds earn 8% annually, how much does she need to invest each year to have exactly $1,000,000 by her 60th birthday?
1 answer:
You have to calculate an annuity, specifically, you have to solve for the annual amount needed. (see attached).
In the formula, the "n" stands for years.
Amount = 1,000,000 / ({[(1.08)^(35+1)]-1/ .08}-1)
Amount = 1,000,000 / ({(<span> <span> <span> 15.9681718379 </span> </span> </span> -1) / .08})-1
Amount = 1,000,000 / [(<span>14.9681718379 / .08) -1]
</span>Amount = 1,000,000 / <span> <span> <span> (187.1021479733 </span> </span> </span> -1)
Amount = 1,000,000 / 186.1021479733
Amount = <span> <span> <span> 5,373.39</span></span></span>
Here's a calculator to check that answer:
http://1728.org/annuity.htm
In the formula, the "n" stands for years.
Amount = 1,000,000 / ({[(1.08)^(35+1)]-1/ .08}-1)
Amount = 1,000,000 / ({(<span> <span> <span> 15.9681718379 </span> </span> </span> -1) / .08})-1
Amount = 1,000,000 / [(<span>14.9681718379 / .08) -1]
</span>Amount = 1,000,000 / <span> <span> <span> (187.1021479733 </span> </span> </span> -1)
Amount = 1,000,000 / 186.1021479733
Amount = <span> <span> <span> 5,373.39</span></span></span>
Here's a calculator to check that answer:
http://1728.org/annuity.htm
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