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A young engineer wishes to become a millionaire by the time she is 65 years old. She plans to make annual deposits, beginning on her 25th birthday and continuing through her 64th birthday.

Assume that she can obtain a 8% rate of return per year. How much should each annual deposit be?

a. $2160
b. $2675
c. $3110
d. $3575

Respuesta :

facundobuzzetti

Answer:

Annual deposit= $3,860.16

Explanation:

Giving the following information:

Future Value (FV)= $1,000,000

Number of peridos= 40 years

Interest rate (i)= 8%= 0.08

To calculate the annual deposit, we need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

Isolating A:

A= (FV*i)/{[(1+i)^n]-1}

A= (1,000,000*0.08) / [(1.08^40) - 1]

A= $3,860.16

anthougo

If the young engineer can obtain an 8% rate of return per year on her deposits, she can make an annual deposit of d. $3575 to become a millionaire in 40 years from her 25th birthday.

Data and Calculations:

Future deposit expected = $1,000,000

Period of savings = 40 years (64 - 24)

Interest rate per year = 8%

Annual deposit = $3,575 (calculated below)

N (# of periods)  40

I/Y (Interest per year)  8

PV (Present Value)  0

FV (Future Value)  1000000

Results:

PMT = $3,574.22

Sum of all periodic payments $142,968.94

Total Interest $857,031.06

Thus, by the end of 40 years, the young engineer will become a millionaire if she deposits $3,575 annually with an interest of 8% per year.

Learn more: https://brainly.com/question/14602883

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