Mr. Hopper expects to retire in 30 years, and he wishes to accumulate $1,000,000 in his retirement fund by that time. If the interest rate is 12 percent per year, how much should Mr. Hopper put into his retirement fund at the end of each year in order to achieve this goal?
A)$4,143.66
B)$8,287.32
C)$4,000.00
D)$12,483.17

Question

Quizplus · Accepted Answer

To solve this, we use the formula for the future value of an annuity, which is FV = P * [((1 + r)^n - 1) / r], where FV is the future value ($1,000,000), P is the annual payment, r is the annual interest rate (12% or 0.12), and n is the number of periods (30 years). Rearranging the formula to solve for P gives us P = FV / [((1 + r)^n - 1) / r]. Plugging in the values gives P = $1,000,000 / [((1 + 0.12)^30 - 1) / 0.12], which calculates to approximately $4,143.66.

Mr Hopper Expects to Retire in 30 Years, and He