Question

7 When you get your big bonus at the end of the year, how much cash should you invest each year to have 1 Million in 30 years if you can earn 11% ?

- If instead of waiting to the end of the year, you invest starting today, how much do you add annually to reach the 1 million in 30 years earning 11 % ?

Answer 1

We will be using BA 2 plus financial calculator to calculate each year's cash flow

1) At the end of the year

N(years) = 30

I/Y (interest rate) = 11%

FV = 1,000,000

CMPT PMT

Cash flow required each year at the end to have $1 million in 30 years = $5,024.59

2) At the beginning of the year

Set financial calculator to BGN mode

N(years) = 30

I/Y (interest rate) = 11%

FV = 1,000,000

CMPT PMT

Cash flow required each year at the beginning to have $1 million in 30 years = $4,526.66