After retirement,you expect to live for 25 years.You would like to have $75,000 income each year.How much should you have saved in your retirement account to receive this income,if the interest rate is 9% per year? (Assume that the payments start on the day of your retirement.)
A)$736,693.47
B)$802,995.88
C)$2,043,750.21
D)$1,427,831.93

Question

Quizplus · Accepted Answer

To calculate the amount needed for retirement, we can use the formula for present value of an annuity:

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

Where PMT is the annual income needed, r is the interest rate, and n is the number of periods (in this case, 25 years).

Plugging in the values, we get:

$75,000 x ((1 - (1 + 0.09)^-25) / 0.09) = $802,995.88

Therefore, the best choice is B.

After Retirement,you Expect to Live for 25 Years