Suppose that you want to have $1,000,000. so, you invest an initial $15,000 today which pays an annual compounding rate of 9%. also, you make annual payments of $1,000. how long will it take to get the $1,000,000?

Question

Mathematics

Gizmo

11 September, 11:39

Suppose that you want to have $1,000,000. so, you invest an initial $15,000 today which pays an annual compounding rate of 9%. also, you make annual payments of $1,000. how long will it take to get the $1,000,000?

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Answers (1)

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Amaris Higgins · Answer 1

To awnser this, you first need to discover how much is 9% of 15000 that you invested.

To discover that you can just divide by 100 and multiply by 9

15000 : 100 = 150

150 * 9 = 1350

So each year he earns $1350 but he has $1000 annual payments, so he only profit $350 a year.

Now to discover how long it will take to achieve $1.000.000 back you can just take the the $15.000 he needs to have 1.000.000 and divide by how much he profit each year

15000:350 = 42.85

which means it will take approximately 42 years and 10 months to achieve $1.000.000