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An engineer invests $5,000 at the end of every year for a 40-year career. If the engineer wants $1 million in savings at retirement, what interest rate must the investment earn
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An engineer invests $5,000 at the end of every year for a 40-year career. If the engineer wants $1 million in savings at retirement, what interest rate must the investment earn

User CasualDemon
by
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1 Answer

6 votes

Answer: 7%

Step-by-step explanation:

Given data:

P = $5,000

r = ?

t = 40years

i = $1,000,000

Solution:

NFW = 0 = -$5000 ( F/A , i , 40 ) + $1,000,000

( F/A , i , 40 ) = $1,000,000 / $5,000

= 200

From compound interest table

( F/A , 7% , 40 ) = 199.636

Therefore the return for the investment would be 7%

User Walv
by
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