Homework Soursewhat annual interest rate would you need to earn if you want
what annual interest rate would you need to earn if you wanted a $1,000 per month contribution to grow to $80,000 in six years?
what annual interest rate would you need to earn if you wanted a $1,000 per month contribution to grow to $80,000 in six years?
what annual interest rate would you need to earn if you wanted a $1,000 per month contribution to grow to $80,000 in six years?
Solution
Monthly Contribution = $1,000
Accumulated Sum = $80,000
Period = 6 years or 72 months
Let monthly interest rate be i%
$1,000 * FVIFA(i%, 72) = $80,000
Using financial calculator:
N = 72
PV = 0
PMT = -1000
FV = 80000
I = 0.292%
Monthly Interest Rate = 0.292%
Annual Interest Rate = 12 * 0.292%
Annual Interest Rate = 3.50%
