Question

You have $50,000 in savings for retirement in an investment earning a stated annual rate of 4% compounded quarterly. You aspire to have $1,000,000 in savings when you retire. Assuming you add no more to your savings, how many years will it take to reach your goal? Please round your answer to the nearest hundredth.

Answer 1

Answer:

n=75 years

Explanation:

Giving the following information:

You have $50,000 in savings for retirement in an investment earning a stated annual rate of 4% compounded quarterly. You aspire to have $1,000,000 in savings when you retire.

First, we need to find the effective rate:

Effective rate= 0.04/4= 0.01

Now, we need to isolate "n" in the final value formula

FV= PV*(1+i)^n

Isolatin n

n= [ln(FV/PV)]/ln(1+i)

n= ln(1000000/50000)/ln(1.01)

n= 301 quarters

n=75 years