You wish to save $500,000 in the next 25 years.You notice that a corporate bond fund earns about 11 percent per year and that is where you put your savings.How much must you save each year to obtain your goal?
A)$20,000.00
B)$ 3,749.98
C)$ 4,370.13
D)$ 2,000.00

Question

Quizplus · Accepted Answer

To find the annual savings required, we use the future value of an annuity formula: FV = Pmt * [(1 + r)^n - 1] / r. Here, FV = $500,000, r = 0.11, and n = 25. Solving for Pmt gives approximately $4,370.13.

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