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Present value sura wiggle would like to make a single investment have 2.2 million at the time of her retirement in 28 years she has found a mutual fund that will earn 7% annually how much will Sarah have to invest today if there are an annual return of 15%

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jepessoa

Answer:

if the annual interest rate is 7%, then you need to invest:

present value = future value / (1 + i)ⁿ

  • future value = $2,200,000
  • i = 7%
  • n = 28 years

present value = $2,200,000 / (1 + 7%)²⁸ = $330,884.87

if the interest rate is 15%, the you need to deposit a smaller amount:

present value = future value / (1 + i)ⁿ

  • future value = $2,200,000
  • i = 15%
  • n = 28 years

present value = $2,200,000 / (1 + 15%)²⁸ = $43,942.34

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