Question

g Today, Adam and Eve each have $500,000 in an investment account. No other contributions will be made to their investment accounts. Both have the same goal: They each want their account to reach $1.5 million, at which time each will retire. Adam has his money invested in risk-free securities with an expected annual return of 4 percent. Eve has her money invested in a stock fund with an expected annual return of 11 percent. How many years after Eve retires will Adam retire? Pick the closest answer. 16.24 19.0 10.53 17.48 28.01

Answer 1

Answer:

17.48

Explanation:

For this question we use the NPER formula that is shown on the attachment. Kindly find it below:

In the first case,

Provided that

Present value = $500,000

Future value = $1,500,000

Rate of interest = 4%

The formula is shown below:

= NPER(Rate;PMT;-PV;FV;type)

The present value come in negative

So, after solving this, the number of years is 28.01 years

In the second case,

Provided that

Present value = $500,000

Future value = $1,500,000

Rate of interest = 11%

The formula is shown below:

= NPER(Rate;PMT;-PV;FV;type)

The present value come in negative

So, after solving this, the number of years is 10.53 years

So, the number of years after Eve retires is

= 28.01 years - 10.53 years

= 17.48 years