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amanda1604 · Jul 22, 2007, 11:41 PM

I have tried this problem for several days and do not know the formula to use to solve it. Here is the problem
1. Little Mark was given $10,000 at birth from various family members to be invested until his adulthood. The DOW JONES has averaged an annual average growth rate of 10% for the 20th century. If Little Mark invests his $10,000 in a good solid DOW JONES mutual fund which averages 10% growth per year, and then after the first year and every year thereafter ADDS $1000 per year of his own money, how many years will it take for Little Mark to become a millionaire?

Capuchin · Jul 23, 2007, 12:06 AM

Have you tried using a series?

ebaines · Jul 23, 2007, 08:19 AM

I don't think there's a nice tidy formula for this problem. You can construct a series like this:

$<br /> 10,000 * (1.1)^N + 1000* (1.1)^{N-1} + 1000*(1.1)^{N-2} + .... = 1,000,000<br />$

and try and find a value for N that works. You could set this up on a spreadsheet pretty easily.

Capuchin · Jul 23, 2007, 08:42 AM

A spreadsheet was the first thing I did to test the formula I came up with. It was very slightly off though. The series was the only way I could think of doing it. Wanted to see if the OP had thought of using that before giving further help.