Use of Financial Calculator TI BA II Plus required. You have been very risky with your investments but, having just turned 50 years of age, your investment adviser suggests you reallocate to reduce your risk. He advises you that your returns will be lower but it would be a wise move. You have $236 000 saved and wish to retire with $300 000. When will you be able to achieve this if the return is now 5.5 percent compounded monthly?

Question

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The correct answer is A.The formula for calculating the number of years to reach a certain amount is:N = (FV - PV) / (PMT * (1 + I/Y)^Y - 1)where:N = number of yearsFV = future valuePV = present valuePMT = paymentI = interest rateY = number of compounding periods per yearIn this case, we have:FV = $300,000PV = $236,000PMT = $0I = 5.5%Y = 12 (since the interest is compounded monthly)Plugging these values into the formula, we get:N = (300,000 - 236,000) / (0 * (1 + 0.055/12)^12 - 1)N = 4.37 yearsTherefore, you will be able to achieve your goal of retiring with $300,000 in 4.37 years.

Use of Financial Calculator TI BA II Plus Required