Assume you want to accumulate $125,000 for a long-range goal in 40 years. You have two choices. Plan A is an account with annual compounding and an APR of 5%. Plan B is an account with continuous compounding and an APR of 4.5%. How much of an investment does each plan require to reach your goal?

Answer 1

math - bobpursley, Tuesday, May 14, 2013 at 7:41pm

125=M*e^(.045*40)
M=125K/6.04== 20.66236 K

125=M(1+.05)^40
log 125=logM + 40log1.05
M= = 17.75571 thousand

Answer 2

Assume you want to accumulate $250,000 for a long-range goal in 40 years. You have two choices. Plan A is an account with annual compounding and an APR of 3%. Plan B is an account with continuous compounding and an APR of 3.25%. How much of an investment does each plan require to reach your goal? -