Question

QUESTION 1
Harry is 20 years old and plans to retire at age 70 years with $1,600,000 in his retirement account. What amount would he have to set
aside now in an investment paying 2.75% interest if the compounding is done quarterly?

Answer 1

Answer:

Allison would need to deposit $123,950.50

Since we are talking about compounding interest we can use the Exponential Growth formula to calculate this problem. The Formula is the following

y is the total amount after a given time

a is the initial amount

r is the interest rate in decimals

t is the given time

Assuming the total amount is $1,900,000 (since there is a number missing in the question) then we would first need to calculate the daily interest rate (since we are compounding daily) and the amount of days between her first deposit and her withdraw at age 65.

0.07 / 365 = 0.00019178 daily

(65-26) * 365 = 14,235 days

Now we can plug our values into the formula and solve for the initial amount (a)

Allison would need to deposit $123,950.50 into her retirement account today to retire at 65 with $1,900,000.

Step-by-step explanation:

Hope this helps:)

Answer 2

The amount he should set aside now is $7042.94.

What is the amount that should be set aside now?

The formula that can be used to determine the amount that should be set aside now is:

PV = FV / (1 + r)^nm

Where:

• FV = Future value
• P = Present value
• R = interest rate
• m = number of compounding
• N = number of years

$1,600,000 / (1.02750^(50 x 4) = $7042.94

To learn more about future value, please check: https://brainly.com/question/18760477