Question

you want to retire with $500000 in 30 years. you will makr 30 annual contributions to do so. you make all contributions at the end of each year. assuming 10.93% annual returns, how much money does your annual payment need to be

Answer 1

To retire with $500,000 in 30 years, the annual payment needed is approximately $2,744.86.

Step-by-step explanation:

To calculate the annual payment needed to retire with $500,000 in 30 years, we can use the formula for the future value of an ordinary annuity. The formula is: FV = P * [(1 + r)^n - 1] / r

In this formula, FV represents the future value, P represents the annual payment, r represents the annual interest rate, and n represents the number of years.

Plugging in the given values, we get:

FV = $500,000, r = 10.93%, and n = 30

Substituting these values into the formula, we can solve for P:

$500,000 = P * [(1 + 0.1093)^30 - 1] / 0.1093

Simplifying the equation, we find that the annual payment needed is approximately $2,744.86.