Question 103518: Please help me with this problem.
Your parents are planning to retire in 18 years. They currently have $250,,000, and they would like to have $1,000,000 when they retire. What annual rate of interest would they have to earn on their $250,000 in order to reach their goal, assuming they save no more money?
Someone please help me out, I am confused on this question.
Thanks
Steve
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! Your parents are planning to retire in 18 years. They currently have $250,,000, and they would like to have $1,000,000 when they retire. What annual rate of interest would they have to earn on their $250,000 in order to reach their goal, assuming they save no more money?
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That depends on whether they invest the money in a compound interest account
or in a simple interest account.
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Formulas:
simple interest: Value = P(1+rt)
compound interest: Value = P(1+r/n)^(nt)
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Cheers,
Stan H.
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