ey for some unexpected expenses so he borrowed 496433 from a

ey for some unexpected expenses, so he borrowed $4,964.33 from a friend and agreed to repay David needed mon the loan in four equal installments of $1,400 at the end of each year. The agreement is offering an implied interest rate of 5.00% David\'s friend, Keanu, has hired a financial planner for advice on retirement. Considering Keanu\'s current expenses and expected future lifestyle changes, the financial planner has stated that once Keanu crosses a threshold of $3,729,430 in savings, he will have enough money for retirement. Keanu has nothing saved for his retirement yet, so he plans to start depositing $85,000 in a retirement fund at a fixed rate of 5.00% at the end of each year. It will take years for Keanu to reach his retirement goal.

Solution

1.

Using financial calculator

N=4

PMT=-1400

PV=4964.33

FV=0

CPT I/Y=5%

So implied rate is 5%

2.

PMT=-85000

I/Y=5%

FV=3729430

PV=0

CPT N=23.80

It will take 23.80 years