Time Is Money

Exercise

(AACSB) Analysis

Everyone wants to be a millionaire (except those who are already billionaires). To find out how old you'll be when you become a millionaire, go to http://www.youngmoney.com/calculators/savings_calculators/millionaire_calculator and input these assumptions:

Age: your actual age
Amount currently invested: $10,000
Expected rate of return (interest rate): 5 percent
Millionaire target age: 65
Savings per month: $500
Expected inflation rate: 3 percent


Click "calculate" and you'll learn when you'll become a millionaire (given the previous assumptions).
Now, let's change things. We'll go through this process three times. Change only the items described. Keep all other assumptions the same as those listed previously.

  1. Change the interest rate to 3 percent and then to 6 percent.
  2. Change the savings amount to $200 and then to $800.
  3. Change your age from "your age" to "your age plus 5" and then to "your age minus 5".

Write a brief report describing the sensitivity of becoming a millionaire, based on changing interest rates, monthly savings amount, and age at which you begin to invest.

Back to '4.6: Financing Options'