Question

Today is your 21st birthday and you just decided to start saving money so you can retire early. Thus, you are going to save $500 a month starting one month from now. You plan to retire as soon as you can accumulate $1 million. If you can earn an average of 8 percent on your savings, how old will you be when you retire? A. 42.87 years old B. 33.39 years old C. 63.87 years old D. 64.71 years old E. 54.39 years old

Answer 1

Answer: Option E -- 54.39years old

Explanation:

Compound interest is calculated using compound interest formula. Using compound interest formula, which is A = P(1+(r/n)) ^nt

Where A= Final Amount

P = Initial Principal Amount

r = Interest Rate

n = number of times interest applied per time period

t = number of times period elapsed

You/I would be 54.39years old when you/I retired. Which is Option E