Question

Assume your goal in life is to retire with $2,500,000. How much would you need to save at the end of each year if interest rates average 7% and you have a 20-year work life?

Answer 1

Annual deposit= $60,982.31

Step-by-step explanation:

Giving the following information:

Future Value= $2,500,000

Number of periods= 20 years

Interest rate= 0.07

To calculate the annual deposit, we need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

Isolating A:

A= (FV*i)/{[(1+i)^n]-1}

A= (2,500,000*0.07) / [(1.07^20) - 1]

A= 60,982.31