Peter would like to make a single investment and have $1.7 million at the time o

Question

Peter would like to make a single investment and have $1.7 million at the time of her retirement in 34 years. He has found a mutual fund that will earn 5 percent annually.How much will Peter have to invest today? If Peter earned an annual 17 percent percent, how soon could she then retire?

a. If Peter can earn 5 percent annually for the next 34 years, the amount of money He will have to invest today is $_________ (Round to the nearest cent)

b. If Peter can earn an annual return of 17 percent, the number of years until he could retire is _______ years. (Round to one decimal place)

Explanation / Answer

a)

Future value = 1700000

x * (1+5%)^34 = 1700000

=>

amount he needs to invest today = $323,603.16

b)

323603.16 * (1+17%)^n = 1700000

=>

number of years to retire = 10.6 years

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