Question

PLEASE HELP Quick ....Using your current age (18), determine how much you would need to save each year so that you would have a million dollars by the time you are 70. Choose an interest rate of between 5% and 9%, and explain how you arrive at your answer. 2. Using the information above, how much would you have had to save each year if you started to save when you were 10 years old? 3. Using the information above, how much could you withdraw each year if you plan to live until you are 95?

Answer 1

Apply Future Value formula with t = 52 yrs

Answer 2

I assume the problem implies 5% yearly compounded!

Answer 3

how do i do that ?

Answer 4

Do you have a Future Value formula?

Answer 5

nope all i have is that question. and in recent chapters they have worked alot in excel with the pmt fv and some more finanical functions

Answer 6

If you have Excel, you DO have a Future Value function.

=FV(rate,nper,pmt,[pv],[type])

Fill in the blanks.

Answer 7

@bballer100 I believe any financial class has this basic formula!

Answer 8

ok so then whats the pmt ?

Answer 9

I need then amount i need to save each year first right ?

Answer 10

Well, the point of this exercise is EXPLORATION! Play around with it until you find it.

Or, you could use the payment function. =PMT(rate,nper,pv,[fv],[type])

Answer 11

which i thought was the PMT function whichi did

Answer 12

For future reference, why didn't you mention all this in the first place? It a whole lot easier to help if we have a clue what you are doing.

Answer 13

=PMT(0.05,1,0,1000,0) = -1000.00
=PMT(0.05,1,0,1000,1) = -952.38

And thus we see that TYPE = 0 is Payments at the END of the period. TYPE = 1 is Payments at the Beginning of the period.

Answer 14

OK thank you !!!!