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Your parents will retire in 18 years. they currently have $250,000 saved, and they think they will need $1,000,000 at retirement. what annual interest rate must they earn to reach their goal, assuming they don’t save any additional funds?

Respuesta :

Eulogy
$1,00,000 = $250,000 (1+r*18)

4 = 1 + 18r
18r=3
6 = 1/6
r = 16.67% or 16 2/3 %
batolisis

Answer:

approximately 16.67%

Explanation:

Initial capital = $250000

Final capital in 18 years = $1000000 = capital + interest

Time to reach final capital = 18 years

interest after 18 years = final capital - initial capital

                                     = $1000000 - $250000

                                      = $750000

Interest after 1 year will be = $750000 / 18 = $41666.67

to calculate the interest rate needed to getting $1000000 from investing $250000 in 18 years will be

what percentage of $250000 is $41666.67

=  interest / capital * 100

= (41666.67 / 250000) * 100

= 0.1667 * 100 = 16.67%

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