Question

27. Today is your 21st birthday and your parents gave you a gift of $2,000. You just put this money in a brokerage account, and your plan is to add $1,000 to the account each year on your birthday, starting on your 22nd birthday. If you earn 10 percent a year in the brokerage account, what is the minimum number of whole years it will take for you to have at least $1,000,000 in the account? a. 41 b. 43 c. 45 d. 47 e. 48

Answer 1

As per TVM calculation,

Present Deposit = $2,000

Annual Deposit = $1,000

Interest Rate = 10%

Using TVM Calculation,

T = [PV = 2000, PMT = 1000, FV = 1000000, I = 10]

T = 46.50 years

T = ~47 years

Option D is correct