If you want to own $1 million when you retire in 45 years, and you can only make one deposit, how much should you put into your retirement fund now given the interest rate is 3 percent?
A)$250,005
B)$436,770
C)$264,439
D)$275,389

Question

Quizplus · Accepted Answer

To find out how much you should deposit now to have $1 million in 45 years at an interest rate of 3 percent, you can use the formula for the present value of a single future amount: $PV = \frac{FV}{(1 + r)^n}$, where PV is the present value (the amount you need to deposit now), FV is the future value ($1 million), r is the annual interest rate (3%, or 0.03 as a decimal), and n is the number of years (45). Plugging in the numbers: $PV = \frac{1,000,000}{(1 + 0.03)^{45}}$, which calculates to approximately $264,439.

If You Want to Own $1 Million When You Retire