Question

In: Finance

Use excel and show both the numbers and the formulas so I can learn how to...

Use excel and show both the numbers and the formulas so I can learn how to do it

If I want to invest $1200 a year for 20 years and then stop investing for 10 years, to pay for my slacker child to get a doctorate, how much will I need to invest a year in my final 10 years of work to get my $2,000,000 to make me really happy at 12% interest?

Solutions

Expert Solution

Amount to be invested per annum in final 10 years of work = $66440.87

STEP 1
Annual investment 1200
Term 20 years
Rate 12%
FV of amount after 20 years $86,462.93
STEP 2
PV of amount at T=20 $86,462.93
Term 10 years
Rate 12%
FV of amount at T=30 $268,540.74
STEP 3
PV of amount at T=30 $268,540.74
Term 10 years
Rate 12%
FV required at T=40 2000000
Annual investment required $66,440.87

WORKINGS

jeff jeffy answered 2 months ago
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