Assume that Don is 45 years old and has 20 years for saving until he retires.He expects an APR of 8.5% on his investments.How much does he need to save if he puts money away annually in equal end-of-the-year amounts to achieve a future value of one million dollars in 20 years' time?
A)$20,570.00
B)$20,670.97
C)$20,770.90
D)$20,800.00

Question

Quizplus · Accepted Answer

Using the formula for the future value of an annuity:
FV = PMT x [(1 + r)^n - 1] / r
where FV is the future value, PMT is the annual payment, r is the interest rate per period, and n is the number of periods.
We can calculate the annual payment that Don needs to make to achieve a future value of one million dollars:
$1,000,000 = PMT x [(1 + 0.085)^20 - 1] / 0.085
PMT = $20,670.97 (rounded to the nearest cent)
Therefore, Don needs to save $20,670.97 annually in equal end-of-the-year payments for 20 years at an APR of 8.5% to achieve a future value of one million dollars. The answer is B.

Assume That Don Is 45 Years Old and Has 20