Annual Interest Rate

Question

What annual interest rate would you need to earn if you wanted a $1,000 per month contribution to grow to $84,500 in six years?

Answer 1

Solved using Excel, let me know and I can guide you throught the process;

Monthly contribution 1,000

Future Value 84,500

Period 6 Years

Compounding monthly

Monthly Rate 0.44%

Annual Interest Rate 5.28%

FV = P * [((1 + r)^n - 1) / r]

Where:

FV = Future Value = 84,500

P = Payment = 1,000

r = Interest rate/Discount Rate =??

n = Number Payments = 6*12 = 72