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You plan to retire in 30 years and would like to have $1,000,000 in investments. How much money would you have to invest today at a 7% annual interest rate compounded daily to reach your goal in 30 years? (Assume all years have 365 days. Round your answer to the nearest cent.)

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  1. 4 May, 05:06
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    Use the compound interest formula.

    Let A = the ending amount

    Let P = the principal

    Let r = the interest rate

    Let n = the amount compounded a year

    Let t = time

    A = P (1 + r/n) ^ (n/t)

    Substitute your numbers in

    1,000,000 = P (1 +.07/365) ^ (365/30). Divide each side by (1 +.07/365) ^ (365/30).

    365 / 30 = 10,950

    1,000,000 / (1 +.07/365) ^ (10,950) = P. Calculate your value for P.

    $122,481.09 = P
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