Randy Hill wants to retire in 20 years with $1,000,000. If he can earn 10% per year on his investments, how much does he need to deposit each year to reach his goal? Round your answer to the nearest dollar.

Question

Quizplus · Accepted Answer

To find the annual deposit needed, use the future value of an annuity formula: FV = Pmt * [(1 + r)^n - 1] / r. Solving for Pmt gives Pmt = FV / [(1 + r)^n - 1] / r. Plugging in FV = $1,000,000, r = 0.10, and n = 20, the annual deposit (Pmt) is approximately $17,460.

Randy Hill Wants to Retire in 20 Years with $1,000,000