Question

You believe you will need to have saved $590,000 by the time you retire in 30 years in order to live comfortably. If the interest rate is 6% per year, how much must you save each year to meet your retirement goal? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Answer 1

$7462.86

Step-by-step explanation:

Given

FV= $590000

r =6%

n = 30

C =? period payments

So the future value of annuity is appropriate to use

FV = C × {(1+r)^t-1/r}

Then substitute in formula and solve for Annual savings (C)

590000 = C × {(1+0.06)^30-1/0.06}

590000 = C × 79.0582

C = 590000/79.0582

C = $7462.86

Answer 2

The amount of money you must save each year to meet your retirement goal is $7,462.86

Step-by-step explanation:

Acording to the data, we have the following:

Future value =$590,000 , N = 30 years and I = 6%

Therefore, to calculate the amount of money you must save each year to meet your retirement goal you have to use the formula of the future value.

Future value = yearly deposit * FVIFA (N,i)

$590,000 = deposit * FVIFA (30 , 6%)

Deposit = $590,000 / 79.0582 = $7,462.86 . Money to save each year.