An investment advisor is planning the retirement of a customer. The customer has $10,000 dollars to invest and needs the investment to increase to $30,000 within 20 years...so 20 years or less.
Now I need to figure out 2 investment plans to make the above numbers work themselves out. I am so incredibly frustrated. I thought of the compound interest formula, but the problem does not tell me how many times a year the investment can or should be compounded.
Can someone please shed some light? I really need help!
Thanks is advance!
solve for r to find the required interest rate.
once again solve for R to find required rate using simple interest.
I have been told to use the formula A = Pe^rt.
So, I get $30,000 = $10,000 e^20r
I am unsure where to go from here????
OK, I think I got it. I got a percentage of 5.5%.
Can anyone tell me if this is correct?
YESSSS! I got the 5.5% too. I figured it out. Sooo proud of myself!! (Rofl)
I believe it means the money is continuously compounded.
Originally Posted by missyd819
Hi, I have noticed that this problem was already posted one time here, however even after reading I am still not clear on the investment plan part.
The problem states: create three investment plans for customer who has $10,000 dollars to invest and needs the investment to increase to $30,000 dollars within 20 years.
I have created a plan using Exponential Growth formula for a long term CD investment, and a Compound Interest Formula for a savings account. Now I am not sure what to use for the third plan (Thinking). Anyone? I was thinking about investing in stocks with dividents for 20 years, however not sure what formulas to apply and how. Please Help!! (Happy)
The poor guy wants to invest $10,000 and get back $30,000
20 years later; he doesn't care HOW it's done: so why all the
run around about 3 plans?
10000(1 + i)^20 = 30000
ONLY one annually compounded rate is possible.
How did you use the Exponential Growth formula?
I used continuous and I also found a plan on the Fidelity website that met the criteria for this plan. I need to use something else besides continuous growth, but I am unsure how to solve this using exponential growth.