Finding the required interest rate: Your parents will retire in 18 years. They currently have $250,000, and they think they will need $1,000,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? excel formula

i = 8% annual compunded

Explanation:

Giving the following information:

Your parents will retire in 18 years. They currently have $250,000, and they think they will need $1,000,000 at retirement.

We need to calculate the interest rate required to reach the $1 million goal in 18 years without any additional deposit.

FV = PV * (1+i) ^n

Isolating i:

i = [ (FV/PV) ^ (1/n) ] - 1

i = [ (1,00,000/250,000) ^ (1/18) ] - 1 = 0.08

i = 8% annual compunded