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Alexandre would like to accumulate $1,500,000 when he retired. He can only save $5,688.65 at the...

Alexandre would like to accumulate $1,500,000 when he retired. He can only save $5,688.65 at the end of every quarter. If he can earn 6.5% interest converted quarterly, how many years will it take him to save the amount?

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Answer #1

Information provided:

Future value (PV)= $1,500,000

Quarterly saving= $5,688.65

Quarterly interest rate= yield to maturity (I/Y)= 6.5%/ 4= 1.6250% per quarter

The time taken to save the amount is calculated by entering the below information in a financial calculation:

FV= 1,500,000

PMT= -5,688.65

I/Y= 1.6250

Press the CPT key and N to compute the time of the bond.

The value obtained is 103.28.

Therefore, it takes 103.28/4 = 25.82 years to save the amount .

In case of any query, kindly comment on the solution.

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