Question

How much would you need to invest at 8.75% interest rate compounded daily for 50 years to have $1,000,000 at the end of that time period?

Answer 1

• You would need to invest $12594.78

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Given:

• Interest rate r = 8.75% or 0.0875,
• Time t = 50 years,
• Compound number n = 365,
• Future amount A = $1000000

Find the invested amount P using compound interest equation:

• 
  `A=P(1+r/n)^(nt)`

Substitute to get:

• 
  `1000000=P(1+0.0875/365)^(365*50)`
• 
  `1000000=P(79.398)`
• 
  `P=1000000/79.398`
• 
  `P=12594.78`