Question

If Edward wants to earn $215,000 within the next 20 years and the salaries grow at 4.15% per year, what salary should he start at to reach his goal? (Round your answer to the nearest whole number.)

Answer 1

Answer:

$95,335 (to the nearest whole number)

Explanation:

Using the formula:

Amount = A * (1/(1+r)^t

where A = Anticipated Amount = $215,000

r = rate = 4.15% = 0.0415

t = time (in years) = 20

Substituting the above in the formula:

Amount = $215,000 * (1/1+0.0415)^20

= $215,000 * 0.44341922 = $95,335 (to the nearest whole number).

Therefore, the salary he should start at to reach his goal = $95,335

Answer 2

Answer:

$89,000

Explanation:

Explanation:

Let the salary at the beginning be A

Interest increment is i = 4.15℅

Future value aimed for is F = $215000

Number of years is n=20

The formula for the future value of a present sum is given as

F = A(1+I)^n

215000 = A(1+0.0415)^20

215000 = A(1.0415)^20

Taking log of both sides

Log215000 = LogA + 20Log1.0415

LogA = Log215000 - 20Log1.0415

LogA = 4.95

Taking anti log of 4.95

We have that ;

A = $89,000