Clement would like to have $1 million accumulated at the time of his retirement
ID: 2417730 • Letter: C
Question
Clement would like to have $1 million accumulated at the time of his retirement 30 years from now. If the annual deposit increase is 3% and if the mean interest rate is 5%, determine the first deposit he should make at the end of his first year of his investment career.
A. $231,400
B. $33,000
C. $14,420
D. $45,621
E. None of these. My answer is:
Not real sure what to do here. I set up a modified equation in excel to calculate this and got $51,916.19. Not at all confident about it. I do know that you can't just add the deposit increase and the interest rate together and say that it just has an interest rate of 8%. You need to compound the deposit increase each year.
Explanation / Answer
answer is none of these
for last year there wont be interest for the deposit , interest will be given only on $929963
year amount opening balance interest rate factor @ 5% amount 1 10067 10067 1.05 10570.35 2 10369.01 20939.36 1.05 21986.328 3 10680.0803 32666.4083 1.05 34299.72872 4 11000.48271 45300.21142 1.05 47565.222 5 11330.49719 58895.71919 1.05 61840.50514 6 11670.41211 73510.91725 1.05 77186.46311 7 12020.52447 89206.98758 1.05 93667.33696 8 12381.1402 106048.4772 1.05 111350.901 9 12752.57441 124103.4754 1.05 130308.6492 10 13135.15164 143443.8008 1.05 150615.9909 11 13529.20619 164145.1971 1.05 172352.4569 12 13935.08238 186287.5393 1.05 195601.9163 13 14353.13485 209955.0511 1.05 220452.8037 14 14783.72889 235236.5326 1.05 246998.3592 15 15227.24076 262225.6 1.05 275336.88 16 15684.05798 291020.9379 1.05 305571.9848 17 16154.57972 321726.5646 1.05 337812.8928 18 16639.21711 354452.1099 1.05 372174.7154 19 17138.39363 389313.109 1.05 408778.7645 20 17652.54544 426431.3099 1.05 447752.8754 21 18182.1218 465934.9972 1.05 489231.7471 22 18727.58545 507959.3325 1.05 533357.2991 23 19289.41302 552646.7122 1.05 580279.0478 24 19868.09541 600147.1432 1.05 630154.5003 25 20464.13827 650618.6386 1.05 683149.5705 26 21078.06242 704227.633 1.05 739439.0146 27 21710.40429 761149.4189 1.05 799206.8898 28 22361.71642 821568.6063 1.05 862647.0366 29 23032.56791 885679.6045 1.05 929963.5847 30 23723.54495 929963.5847 1.05 1000185.309Related Questions
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