Question

You have $50,000 in savings for retirement in an investment earning 5% annually. You aspire to have $1,000,000 in savings when you retire. Assuming you add no more to your savings, how many years will it take to reach your goal?

Answer 1

Answer: It will take you about 61 years for you to reach your goal.

Explanation:

We will represent this situation by an exponential function. So if you earn 5% yearly then we could represent it by 1.05.So in exponential function we need to find the initial value and the common difference and in this case the common difference is 1.05 and the initial value or amount is 50,000 dollars.

We could represent the whole situation by the equation.

y=
`50,000(1.05)^(x)` where x is the number of years. so if you aspire to have 1,000,000 in some years then we will put in 1 million dollars for y and solve for x.

1,000,000 = 50,000(1.05)^x divide both sides by 50,000

20 = (1.05)^x

x= 61.40