00:01
Okay, so i'm actually just going to solve the first question listed in this because they are four totally separate problems, and so i'm just solving the first one.
00:12
If you have questions on the others, you are welcome to submit them separately.
00:17
So the first question is asking about what should our payment be when you have an ending goal of a million dollars? in a retirement account.
00:35
You're starting out with nothing.
00:38
Your interest rate is 10%, and your number of payments is 40 or 40 years.
00:46
So what this is is a future value of an ordinary annuity problem.
00:51
So the equation for that is future value equals payment times the future value of an ordinary annuity with respect to i, an n written out that would be future value equals payment times 1 plus i to the n minus 1 all over i and for our problem we're going to plug in the numbers we're given so we've got a million equals payment times one plus 10 % to the 40 minus one all over point one.
01:49
So you can plug this into a calculator or you can use a table typically given in your accounting textbook.
01:59
Just go to the future value of ordinary annuity table, go to the column that says 10%, and then the row that says 40 for 40 payments...