Ajo is aiming at saving $0.5 million by the time she reaches age 35.suppose she is 25 years currently, and can earn 5% on funds she may invest,how much should she invest to attain that goal?
| Payment required | = | FV*r /[(1+r)^n -1] | |
| Future value | FV | 500,000.00 | |
| Rate per period | r | ||
| Annual interest | 5.0% | ||
| Number of payments per year | 1 | ||
| Interest rate per period | 0.05/1= | ||
| Interest rate per period | 5.000% | ||
| Number of periods | n | ||
| Number of years | 10 | ||
| Periods per year | 1 | ||
| number of periods | 10 | ||
| Period payment | = | 500000*0.05/ [(1+0.05)^10 -1] | |
| = | 39,752.29 |
She must invest every year 39,752.29 to achive her goal.
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