Question

You have $8,320.04 in a brokerage account, and you plan to deposit an additional $5,000 at the end of every future year until your account totals $240,000. You expect to earn 14% annually on the account. How many years will it take to reach your goal? Round your answer to the nearest whole number.

Answer 1

We know that,

Future Value = Amount * (1+rate)^(end year - given year) + Amount * (1+rate)^(end year - given year) + Amount * (1+rate)^(end year - given year) + Amount * (1+rate)^(end year - given year) + Amount * (1+rate)^(end year - given year) ....................

240000 = 8320.04*(1+0.14)^(end year - 0) + 5000*(1+0.14)^(end year - 1) + 5000*(1+0.14)^(end year - 2) +5000*(1+0.14)^(end year - 3) +5000*(1+0.14)^(end year - 4) +5000*(1+0.14)^(end year - 5) ............ +5000*(1+0.14)^(0)

We will use heat and trial method to get that value for which above equation satisfy.

End year = 14 years Answer

Or Using Financial Calculator:

FV = 240000

PV = -8320.04

PMT = -5000

I/Y = 14

CPT N

N = 14 Answer