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

Question

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

If you can earn an annual return of 11.12 percent, how much do you have to invest today? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

What if you can earn an annual return of 5.56 percent? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

If you can earn an annual return of 11.12 percent, how much do you have to invest today? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Explanation / Answer

1. Let amount deposited now be P.

So P*(1.1112^45) = 1,000,000, which means P=8,696.60

2. Let amount deposited now be P.

So P*(1.0556^45) = 1,000,000, which means P=87,604.79

Hope this helped ! Let me know in case of any queries.

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