Carlton will retire in 40 years. His retirement goal is $4,000,000. He opened a Fidelity a...

Carlton will retire in 40 years. His retirement goal is $4,000,000. He opened a Fidelity a single amount today in an SP500 index. His financial advisor Jordan, informed xpected return of 11.4\% . How much should he invest today to meet his goal?

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Expert Solution

FV = retirement goal = $4,000,000

n = 40 years

r = expected return = 11.4%

Amount to be invested today = FV / (1+r)^n

= $4,000,000 / (1+11.4%)^40

= $4,000,000 / 75.0598399

= $53,290.8144

Therefore, amount requied to invest today to reach the retirement goal is $53,290.81

jeff jeffy answered 1 year ago

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