Suppose a woman has decided to retire as soon as she has saved $900,000. Her plan is to put $1,000 each month into an ordinary annuity that pays an annual interest rate of 2.3%. In how many years will she be able to retire?
+43 I don't know, but all I know is if your waiting for that long than you should probably get a better job, HA.
FV = P x [1 + R]^N - 1 / R
900,000 = 1,000 x {[1 + 0.023/12]^N - 1 / [0.023/12]}
900 ={[1.001916667]^N - 1} / 0.001916667
Solve for N over the real numbers:
900 = 521.739 (1.00192^N - 1)
900 = 521.739 (1.00192^N - 1) is equivalent to 521.739 (1.00192^N - 1) = 900:
521.739 (1.00192^N - 1) = 900
Divide both sides by 521.739:
1.00192^N - 1 = 1.725
Add 1 to both sides:
1.00192^N = 2.725
Take the logarithm base 1.00192 of both sides:
Answer: |N = 523.528 - months =or about 43 years and 7.5 months.
