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Over the past several years, Mr Lee has been able to save regularly
Over the past several years, Mr Lee has been able to save regularly. As a result, today he has $14,188 savings. He wants to establish her retirement fund in 5 years and feels he will need $50,000 to do so.
a. If he can earn 12% p.a. on his money, how much will his $14,188 savings be worth in 5 years? Will Mr Lee have $50,000 he needs? If not, how much more money will he need?
Expert Solution
Computation of Accumulated Amount in 5 Years:
Amount = Principal*(1+Rate)^Time
= $14,188*(1+12%)^5
= $14,188*1.762342
Amount = $25,004.10
Amount in 5 years is $25,004.10
Computation of Additional Amount Required:
Additional Amount Required = $50,000 - $25,004.10 = $24,995.90
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