Answered

At Westonci.ca, we make it easy for you to get the answers you need from a community of knowledgeable individuals. Get quick and reliable solutions to your questions from a community of seasoned experts on our user-friendly platform. Join our Q&A platform to connect with experts dedicated to providing accurate answers to your questions in various fields.

How much money must you set aside at age 40 to accumulate retirement funds of $100,000 at age 65, assuming a rate of interest of 7 percent?

Sagot :

Polyblock

Answer:

$18,424.92

Step-by-step explanation:

Assuming this is compound interest, we'll have to use this formula

A = P(1 + r)ⁿ

A = Final amount (100,000)

P = Starting amount (?)

r = Rate (.07)

n = Years (?)

65 - 40 = 25

This means you will save for 25 years, making n = 25

So far, our equation looks like this: 100,000 = P(1.07)²⁵

To isolate the variable, P, divide both sides by 1.07²⁵

100,000/1.07²⁵ = P(1.07)²⁵/1.07²⁵

P = 18,424.917752223962

You would need to set aside around $18,424.92 if you want to accumulate $100,000 in 25 years with 7% compound interest rate.

We hope this was helpful. Please come back whenever you need more information or answers to your queries. We hope you found what you were looking for. Feel free to revisit us for more answers and updated information. Westonci.ca is your go-to source for reliable answers. Return soon for more expert insights.