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You have decided that you want to be a millionaire when you retire in 45 years. a. If you can earn an annual return of 11.4 percent, how much do you have to invest today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What if you can earn 5.7 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Sagot :

The amount I should invest today if I earn an annual return of 11.4% is  $7,765.45.

The amount I should invest today if I earn an annual return of 5.7% is  $82,532.61.

What is the amount I should invest today?

The formula that can be used to determine the amount I should invest today is:

PV = FV / (1 +r)^t

Where:

  • PV = present value
  • FV = future value = $1,000,000
  • t = 45 years
  • r = interest rate = 11.4%, 5.7%

$1,000,000 / (1.114)^45 = $7,765.45

$1,000,000 / (1.057)^45 = $82,532.61

To learn more about present value, please check: https://brainly.com/question/25748668

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