A business owner plans to deposit his annual profits in an investment account earning a 9% annual return.  If the owner starts with their first deposit today for $22,000 and expects to make the same profit for the next 7 years, how much will be saved for retirement at that point?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A business owner plans to deposit his annual profits in an investment account earning a 9% annual return.  If the owner starts with their first deposit today for $22,000 and expects to make the same profit for the next 7 years, how much will be saved for retirement at that point?      

Please check if my answer is correct, if not please correct me.                                                  

Answer:                                                                                                           

Answer:1,200, n = 6, r = 9%  

(1+r)^n -1 /r

(1+0.09%)^7 - 1/0.09

(1.09)^7 - 1/0.09

1.8280391208 -1/0.09 = 9.2004346756

22,000*9.2004346756 = $202,409.56

 

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