Question

10.6.23

Question Help
Becky would like to be a millionaire in 40 years. How much would she need to invest quarterly in a sinking
fund paying a 3% interest rate compounded quarterly to accumulate $1,000,000 in 40 years?

Answer 1

I = $ 1,200,000.00

Equation:

I = Prt

Calculation:

First, converting R percent to r a decimal

r = R/100 = 3%/100 = 0.03 per year,

then, solving our equation

I = 1000000 × 0.03 × 40 = 1200000

I = $ 1,200,000.00

The simple interest accumulated

on a principal of $ 1,000,000.00

at a rate of 3% per year

for 40 years is $ 1,200,000.00.