Question

Mr. Suleman plans to fund his retirement plan and targeting to get $50,000 at the end of 9^th year, with the maximum investment of $ 1500 at the end of each year for the next 9 years. If Mr. Suleman can earn 12% on his investment, how much will he have at the end of the 9^th year? Write you maximum recommendations to Mr. Suleman regarding this investment plan

Answer 1

Amount Deposited each year (P)= 50000

Interest rate (I)= 12%

Number of years (n)= 9

Future value of Annuity = P*(((1+i)^n)-1)/i

=1500*(((1+12%)^9)-1)/12%

=$22163.48447

So he will have $22163.48 at end of 9 Years.

Required future Value of Annuity = 50000

Future value of Annuity = P*(((1+i)^n)-1)/i

50000= P*(((1+12%)^9)-1)/12%

50000= P*14.77565631

P= 50000/14.77565631

=3383.944438

Recommendations: he should save $3393.94 each year to have $50000 Amount.

So he should Increase his savings to $3393.94 each Year