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March 27, 2017

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If you deposit 1200.00 annually with 5% compounded interest, how many years will it take to get to a million dollars?

  • Math - ,

    Assuming interest is compounded annually (yearly) at r% starting from an initial amount P, then the compound interest formula gives the final amount A after n years.
    A=P(1+r/100)^n
    For the given case
    1000000=1200(1.05)^n
    Rearrange:
    (1.05)^n=1000000/1200=1000/1.2
    Take log on both side
    n(log 1.05)=log (1000/1.2)
    Solve for n
    n=log(1000/1.2)/log(1.05)
    =137.84 (approx)
    or about 137 years and 10 months.
    Not forgetting that we all will probably be making a million dollars a month by then.

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