Question

Charlie is 40 years old and has $450,000 in his savings and he wants to use...

Charlie is 40 years old and has $450,000 in his savings and he wants to use some of the money to buy a house. His goal is to have $1,500,000 in his account by the time he reaches 65. How much should he leave in his account if he earns a 12% APR compounded monthly?

Homework Answers

Answer #1
Required amount will be amount so that future value of which become target amount of $ 1,500,000 by the time he reaches 65.
Amount to be deposited now = Present value of $ 1,500,000 Where,
= A*(1+i)^-n A Future value = $ 15,00,000
= 1500000*(1+0.01)^-300 i Interest rate 12%/12 = 0.01
= $ 75,801.73 n number of period (65-40)*12 = 300
So, he should leave in his account $ 75,801.73
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