It will be helpful to draw a time line when answering the questions. Make sure y

Question

It will be helpful to draw a time line when answering the questions. Make sure you show the inputs you use for each problem. If you don’t use a financial calculator, show the formulas that you use. Don’t just give the final answer. Without showing how to get the answers, you will receive less than half of the credits even if the answers are correct

Draw Time Line, Write what input you use on Financial Calculator, Also say what Mode you used END MODE or BEG MODE

1. Today is Denise’s 30th birthday and she determines to become a millionaire by age sixty-five. She plant to start saving annually at her 30th birthday for 35 years. She anticipates an annual return of 4.5% on her investments. How much does she need to save annually to be a millionaire at her sixty- five birthday? If she saves monthly for 35 years, how much does she need to save monthly to achieve her goal? (draw a simple time line for this question) (6 points)

Explanation / Answer

Hello Team,

We would use future value formula to arrive at the answer -

1) In case she invest every year to receive the future value of 1000000 (1 MM)

FV = A x (1+R) x (((1+R) ^ n) – 1)/R

FV = 1 MM

A = Need to find

R = 4.5%

N = 35 Years

Answer = She needs to deposit 11742 every year to get 1 MM in return

2) In case she invest every year to receive the future value of 1000000 (1 MM)

FV = A x (1+R) x (((1+R) ^ n) – 1)/R

FV = 1000000

R = 4.5% / 12 = 0.38% (converted monthly)

N = 35*12 = 420 Months (converted into months)

A = Need to find

Answer = She needs to invest 979 per month for 420 months to get 1 MM

Thanks

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