You wish to save $500,000 in the next 25 years. You put your savings into a corporate bond fund that earns about 11 percent per year. How much must you save each year to obtain your goal?

Question

Quizplus · Accepted Answer

To find the annual savings required, use the future value of an annuity formula. Solving for the annual payment with a future value of $500,000, an interest rate of 11%, and a period of 25 years gives approximately $4,370.13.

You Wish to Save $500,000 in the Next 25 Years