You want to have a million dollars in the bank when you reti

You want to have a million dollars in the bank when you retire. You think you can save $5 000 a year in a bank that offers you 5% interest. If you make your first deposit in a year\'s time, how many years will it be from now before you can retire? 30 40 50 60 70

Solution

annual deposits = $ 5000

interest rate = 5%

FV = $1000000

Let the time period = n

1000000 = 5000 x (1 + 5%)^n-1 +   5000 x (1 + 5%)^n-2  + 5000 x (1 + 5%)⁰

Solve for \'n\':

n = 49.15 years or 50 years (option 3)