Question

You wish to retire in 30 years and determine that you will need $1,000,000 to fund your retirement. If you can invest with a return of 8% you will need to invest ________ each year to reach your goal.

Answer 1

you will need to invest $8827.43 each year

Step-by-step explanation:

given data

time t = 30 year

future value = $1,000,000

return r = 8%

solution

we apply here future value of annuity that is express as

future value of annuity = annuity ×
`((1+r)^t-1)/(r)` ..................1

put here value

$1,000,000 = annuity ×
`((1+0.08)^(30)-1)/(0.08)`

solve it we get

annuity = $8827.43

so you will need to invest $8827.43 each year