Problema Solution

James Bubba wants to retire in California when he is 70 years of age. Sting is now 50. He believes he will need $130,000 to retire comfortably. To date, Sting has set aside no retirement money. Assume Sting gets 14% interest compounded semiannually. How much must Sting invest today to meet his $130,000 goal?

Answer provided by our tutors

We assume Sting needs to invest X today

70-50=20

X*(1+14%)^20 = 130,000

X = 9,459.0

So he needs to invest $9,459.0 today  to meet his $130,000 goal