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6 February, 05:13

You are planning your retirement and you come to the conclusion that you need to have saved $1000000million in 30 years. You can invest into an retirement account that guarantees you a 12% annual return. How much do you have to put into your account at the end of each year to reach your retirement goal?

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  1. 6 February, 05:40
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    Annual deposit = $4,143.66

    Explanation:

    Giving the following information:

    You need to have saved $1,000,000 in 30 years. You can invest in a retirement account that guarantees you a 12% annual return.

    To calculate the annual deposit needed to achieve the objective, 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 = (1,000,000*0.12) / [ (1.12^30) - 1] = $4,143.66
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