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Llanis Llanis
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6 years ago
Jerry wishes to retire in 5 years with $1 million in his bank account. If the account pays 4% and his current balance is $500,000, how much must he deposit at the beginning of each of the next five years for his wish to come true? The amount must be the same each year.
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Microeconomics

Microeconomics


Edition: 6th
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#1
6 years ago
His current accumulation will grow to $608,326.45, leaving him $391,673.55 short. To get this, he will save X at the beginning of each of the next five years so that $391,673.55 = X[(1.04) + (1.04)2 + (1.04)3 + (1.04)4 + (1.04)5] = X[5.63292]. X = $69,532.95.
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