Mr. Hopper expects to retire in 25 years, and he wishes to accumulate $750,000 in his retirement fund by that time. If the interest rate is 10 percent per year, how much should Mr. Hopper put into his retirement fund each year in order to achieve this goal? (Assume that he makes payments at the end of each year.)
A)$4,559.44
B)$2,500
C)$7,626.05
D)$8,418.29

Question

Quizplus · Accepted Answer

We can use the formula for the future value of an annuity to solve this problem.

FV = PMT * (((1 + r)^n) - 1) / r

where FV is the future value of the annuity, PMT is the annual payment, r is the interest rate per year, and n is the number of years.

Plugging in the given values, we have:

$750,000 = PMT * (((1 + 0.10)^{25}) - 1) / 0.10

Solving for PMT, we get:

PMT = $7,626.05

Therefore, Mr. Hopper should put $7,626.05 into his retirement fund each year to achieve his goal. The closest option is C, $7,626.05.

Mr Hopper Expects to Retire in 25 Years, and He