John Roberts has $42,180.53 in a brokerage account, and he plans to contribute an additional
$5,000 to the account at the end of every year. The brokerage account has an expected annual
return of 12 percent. If John’s goal is to accumulate $250,000 in the account, how many years
will it take for John to reach his goal?
2007-01-31 06:09:37 · 4 answers · asked by **LIBERTY** 1 in Business & Finance ➔ Personal Finance
Your monthly deposit for 11 years of $ 416.67 for an interest rate of 12.000 % compounded annually with an initial amount of $ 42180.53:
YearBalance
0$ 52,814.50
1$ 64,797.11
2$ 78,299.43
3$ 93,514.17
4$ 110,658.53
5$ 129,977.22
6$ 151,746.00
7$ 176,275.61
8$ 203,916.19
9$ 235,062.29
10$ 270,158.49
Final Savings Balance: $ 270,158.49
(this assumes no taxes are taken)
If you are in the 28% tax bracket, with federal taxes taken out, it would take about 12-13 years.
2007-01-31 06:14:29 · answer #1 · answered by Anonymous · 0⤊ 0⤋
If all the 12% interest is paid on the $42,180.53 starting amount, and the $5,000 is added at the end of the year: The account would grow to $208,968,76 in 12 years. And the interest for an additional 5 months will put the account at about $250,000.00.
2007-01-31 14:22:29 · answer #2 · answered by whatevit 5 · 0⤊ 0⤋
12 yrs
We must calculate the 12% every year and then add 5K at the end of every year. By so doing I get 12 yrs.
It is actually between yr. 11-12 that he will reach the mark.
2007-01-31 14:22:12 · answer #3 · answered by Anonymous · 0⤊ 0⤋
He will never reach it as the fees will clobber his account and if you compound that with his bad investment choices and the propensity of some to gamble with investments he will probably loose money over the long run.
Sorry to be a party Pooper but such is life.
2007-01-31 14:17:17 · answer #4 · answered by Anonymous · 0⤊ 0⤋