Income from an apartment building you own totals $260,000 per year. You plan on selling the building and retiring to France in 12 years. Assuming you can invest the income from the building each year at 3%, how much money will you have on which to retire?

Question

Quizplus · Accepted Answer

We can use the formula for the future value of an annuity to calculate the total amount of money we will have after 12 years of investing the income from the apartment building at 3%:

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

where:
PMT = the annual income from the apartment building = $260,000
r = the annual interest rate = 3%
n = the number of years = 12

Plugging in the numbers, we get:

FV = $260,000 x (((1 + 0.03)^12 - 1) / 0.03) = $3,689,920

Therefore, the best choice is C.

Income from an Apartment Building You Own Totals $260,000 Per