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22 July, 07:57

You believe you will need to have saved $480,000 by the time you retire in 40 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

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  1. 22 July, 08:05
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    Hi there

    Use the formula of the future value of annuity ordinary

    The formula is

    Fv=pmt [ (1+r) ^ (n) - 1) : r]

    Fv future value 480000

    PMT payment per year?

    R interest rate 0.06

    N time 40 years

    First we need to solve for pmt

    PMT=Fv:[ (1+r) ^ (n) - 1) : r]

    PMT=480,000: (((1+0.06) ^ (40) - 1)

    : (0.06)) = 3,101.54 ... answer

    Good luck!
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