For the Time value of money, I want you to explore the "=RATE(...)" function in Excel. It calculates the required interest rate your investment has to generate to match your annual contributions to the desired future value. For this exercise you will need to come up with three values (required inputs for RATE function): 1) Number of years until retirement (NPER); 2) How much you are willing to contribute every year (PMT), and the desired amount of money you wish to have at retirement ($1 to $3 million is common). Set your PV (present value) to zero. Is this a realistic rate of return? Which investment product would offer this rate of return?
Number of years until retirement=29
Yearly contribution $5,000
$2 Million at the time of retirement.