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Ilia_Sergeevich [38]
3 years ago
11

So you can retire early, you have decided to start saving $500 a month starting one month from now. You plan to retire as soon a

s you can accumulate $1 million. If you can earn 5 percent on your savings, how many years will it be before you can retire?
Business
1 answer:
Mashcka [7]3 years ago
8 0

Answer:

It will take him 45 years

Explanation:

In this question, we are asked to calculate the number of years it would take to accumulate $1,000,000 if there is a plan to save $500 per month at an interest rate of 5%.

To solve this, we use the following mathematical formula:

Future value of annuity = Annuity payment * {(1+r)^n - 1}/r

Where r is the monthly interest rate and n is the number of months it will take.

From the question, we can identify the following;

Since he earns 5% interest on savings, the actual monthly interest rate will be 5%/12 = 0.4167% = 0.004167

Annuity payment = monthly payment = $500

Future value of annuity = $1,000,000

We substitute these values into the equation:

1,000,000 = 500 * [(1+0.004167)^n - 1]/0.004167

8.334 = (1.004167)^n - 1

1+8.334 = (1.004167)^n

9.334 = (1.004167)^n

To get n, we simply take the log on both sides of the equation

Log 9.334= nLog 1.004167

n = Log9.334/Log1.004167

n = 537 months

Question asks to calculate in years

there are 12 months in a year. The number of years it will take will be 537/12 = 44.76 years and that’s approximately 45 years

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1) attached below

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​Gulfcoast, Inc. purchased a van on January​ 1, 2019, for $ 900 comma 000. Estimated life of the van was five​ years, and its es
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Answer:

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3 years ago
Spencer Enterprises is attempting to choose among a series of new investment alternatives. The potential investment alternatives
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Assume: only one of the ware house expansion projects can be implemented and suppose that, if test marketing of the new product is carried out, the advertising campaign also must be conducted and vice versa. Also suppose that the purchase of new equipment cannot be undertaken unless the basic research or the extensive warehouse expansion are implemented.

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