Question

1. How much money must you set aside at age 20 to accumulate retirement funds of

$100,000 at age 65, assuming a rate of interest of 7 percent?

Answer 1

$4,762.00

Step-by-step explanation:

The applicable formula is the formula for calculating future values.

Fv= P( I+ r )^ n

where Fv= $100,000

p= principal amount

r= interest rate : 7% or 0.07

n= time or number of period : 65 years - 20 year

$100,000= p x ( 1+0.07)^45

$100,000= p x (1.07)^45

$100,000 = p21.00245

p=$100,000/21.00245

p=$4,761.904

Principal = $ 4,762.00