Assume you want to be the millionaire before you retire at age 50. How to reach that goal? This is question, John, 18 year old college student, is faced with as he plans his future.
a) Option 1: Deposit the one time lump sum into investment account and let it sit for 32 years.
i) Suppose that investment account earned 10.3% interest, compounded monthly, how much would John have to deposit at start to reach his goal?
ii) Does it seem feasible that John come up with that type of money?
iii) Assume that John had only $5000 to invest at beginning, how old would John be when that investment reaches $1,000,000?
iv) Assume again that John had only $8,000 to invest at starting, what interest rate would be needed to meet his goal at age 50?