You just inherited?$12 comma 00012,000. while you plan to squander some of it? away, how much should you deposit in an account earning 44?% interest per year if? you'd like to have?$12 comma 00012,000 in the account in 88? years?

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Lam

2 November, 22:54

You just inherited?$12 comma 00012,000. while you plan to squander some of it? away, how much should you deposit in an account earning 44?% interest per year if? you'd like to have?$12 comma 00012,000 in the account in 88? years?

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Isabell · Answer 1

44% annual interest sounds too good to be true, but we'll work with it.

Don't know exactly how much is $12 comma 00012,000.

I will work with $1,000,000 (one million). You can scale the results to the right amounts.

Future value = $1,000,000

i=0.44

n=88

Present value=$1,000,000 / (1+0.44) ^88=$1.159*10^ (-8), not even one cent!

However, if the interest rate is 4% for 88 years (more likely), then

Present value=F / (1.04^88) = 1,000,000/1.04^88=$317,000.50.

That's the amount you need to put in today to get $1000000 in 88 years at 4% APR (compounded annually).