Annuities
Response to the following problem:
You've just read a life-enhancing book that tells you that if you believe things will happen, they will! You decide that you want to become a millionaire by the time you are 65. You have just turned 22, and you decide to play the stock market. Your fantastic corporate finance textbook leads you to believe that you can earn 11.8 per cent per annum from investing in equities. How much must you invest each year in order to realize your dream? You've decided that investing each year will be boring, and so you just want to invest an amount today and leave it in an account for 43 years. How much should you invest today?