Allison is 30 years old and plans to retire at age with 1,200,000 in her retirement account. what amount would she have to set aside now in an investment paying 6% annual interest if the compounding is done daily

Answers (1)

Answer:   Let the principal amount she sets a side in an investment be $ P 

                She retires at an age of 65 , that is , in 35 years from the date of investment .

            Period of investment = 35 years 

        rate of interest =6% per annum =( 6/365)% = 0.016438 % per day 

         r = 0.016438% 

 

n= number of time the interest is compound 

As compounding is done each day ,  \ n=(365	imes 35)=12775

Maturity Amount = 1,200,000$ =P 

⇒    = \ P(1+ 0.016438/100)^12775=(1.00016438)^12775 

P= $1200000/8.1644=14697$

 

 

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