8/11/2019 MAT221WK4 DQ1

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Working in Corporate America for so many years I was not that concerned about retirement.

However now that I own my own business I must put aside money for retirement. At the age of

43, I have decided that now is a great time to place money away to start a sizeable amount of

money to possibly retire in 12 years. Currently I average $50,000 per year however, that will

increase over the years. I am basing my savings based on that current salary. Therefore saving

in an awesome new investment opportunity at 10%, I need to calculate how much I must

contribute in order to save money to retire. My goal is to have $150,000 in 12 years. In order to

calculate this properly I will use the following formula:

o The desired item is retirement.

o The cost in 12 years is approximately $150,000

o The interest rate of my investment is 10%

o The Present Value Formula is P = A(l + r)-n

o P is the present value that will calculate A dollars in -n years at an interest

rate of r annually.

Within our formula the -n is a negative exponent as with the rules of exponents after the

negative has been placed the base quantity will change position by dropping down into the

denominator. It will then be a positive exponent and we will divide A instead of using

multiplication. Our calculations are now as follows after substituting within the formula:

P = 150000(l + .10)-12 My retirement numbers are substituted within the formula

P = 150000(l.10)-12 Addition is used within the parenthesis

P =

The reciprocal of the negative exponent is found

P =

The reciprocal moves to the bottom because of the rules of

exponents and is applied to the base number

P = 47801.15

After my calculations, I would need to place $47, 801.15 in my investment order to complete my

goal.