Question

You have decided that you want to be a millionaire when you retire in 45 years.

Answer 1

Answer:

for rate 11.2  percent ,principal = 8419.47

for rate 5.6 percent , principal = 86123.90

Explanation:

given data

amount wish A = 1,000,000

time t = 45 year

rate r1  = 11.2 % = 0.112

rate r2 =  5.6 % = 0.056

to find out

how much do you have to invest today

solution

we know here amount formula that is

amount = Principal × $( 1+ r)^{t}$   ..........................1

here r is rate and t is time so

for rate r1 principal amount is by equation 1 we get

amount = Principal × $( 1+ r)^{t}$  

1,000,000 = Principal × $( 1+ 0.112)^{45}$  

principal = 8419.47

and for rate r2 principal is from equation 1

amount = Principal × $( 1+ r)^{t}$  

1,000,000 = Principal × $( 1+ 0.056)^{45}$  

principal = 86123.90