Suppose an 18-year-old Soldier wishes to retire from the Army as a millionaire. She intends to contribute $10,000 to the Thrift Saving Plan (TSP) at the end of each year until she retires with $1,000,000 in that account. Would she meet her retirement goal if the Army retains her until she is at 60 years of age, assuming the TSP offer her a constant 5% annual rate of interest for her entire time of service?
Now, suppose that she would like to retire as soon as possible with $1,000,000 in her account. Assuming that nothing else changes, what is the earliest age that she can retire?
You have deposited an amount of money (PV) into an account that will earn 3% interest, compounded on an annual basis. Your goal is to have $10,000 at the end of a six-year period, how much money do you initially deposit?
Solve for PV.
This solution illustrates how to find the future value of an annuity using Excel functions, how to find the number of periods using these functions, and how to find the present value of a lump-sum using these functions.