John roberts has $42,180.53 in a brokerage account and he plans to contribute an additional $5000 to the accou

Question

John roberts has $42,180.53 in a brokerage account and he plans to contribute an additional $5000 to the account at the end of the year the brokerage account has an expected annual return of 12 percent. If johns goals is to accumulate $250,000 in the account how many years will it take for john to reach his goal

Answer 1

If you assume he begins at t=0 with $42,180.53 and that the $5,000 is added at the end of the every year, then John will have $250,000 at the end of year 11.

Year End Value
0 -- 42,180.53
1 -- 52,242.19
2 -- 63,511.26
3 -- 76,132.61
4 -- 90,268.52
5 -- 106,100.74
6 -- 123,832.83
7 -- 143,692.77
8 -- 165,935.90
9 -- 190,848.21
10 -- 218,750.00
11 -- 250,000.00

To get each year's value, multipily the previous year by 1.12 and then add the 5,000.

Answer 2

The first answer is correct. However, this looks like a homework question. If you can't determine the answer in MS Excel, or any other spreadsheet in the time it took you to post the question, you did not learn the material.