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14 November, 14:41

An engineer invests $5,000 at the end of every year for a 40-year career. If the engineer wants $1 million in savings at retirement, what interest rate must the investment earn

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  1. 14 November, 15:03
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    Answer: 7%

    Explanation:

    Given dа ta:

    P = $5,000

    r = ?

    t = 40years

    i = $1,000,000

    Solution:

    NFW = 0 = - $5000 (F/A, i, 40) + $1,000,000

    (F/A, i, 40) = $1,000,000 / $5,000

    = 200

    From compound interest table

    (F/A, 7%, 40) = 199.636

    Therefore the return for the investment would be 7%
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