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28 November, 01:19

You're saving for retirement and hope to have $1,000,000 in 50 years. Your account earns 5% annual interest. How would you need to deposit now if the account earns simple interest? Show work!

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Answers (2)
  1. 28 November, 01:34
    0
    1.05^50=11.47% will be your interest over the years

    1000000 = X x 11.47

    1000000:11.47 = 87,183.96
  2. 28 November, 01:40
    0
    I=PRT

    I=interest

    P=principal

    R=rate

    T=time in years

    we want

    I+P=1,000,000

    I=PRT

    R=5%=0.05

    T=50

    P (0.5) (50) + P=1,000,000

    25P+P=1,000,000

    26P=1,000,000

    divide both sides by 26

    P=38461.5384

    round to tenth

    P=$38,461.54

    you would need to invest $38,461.54
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