You want to have $1 million in your savings account when you retire.You plan on investing a single lump sum today to fund this goal.You are planning on investing in an account which will pay 7.5 percent annual interest.Which of the following will reduce the amount that you must deposit today if you are to have your desired $1 million on the day you retire?
I.Invest in a different account paying a higher rate of interest.
II.Invest in a different account paying a lower rate of interest.
III.Retire later.
IV.Retire sooner.
A)I only
B)II only
C)I and III only
D)I and IV only
E)II and III only

Question

Quizplus · Accepted Answer

Investing in an account with a higher interest rate (I) or choosing to retire later (III) both reduce the amount you need to deposit today to reach $1 million by retirement, due to the increased compounding periods or higher interest accumulation.

You Want to Have $1 Million in Your Savings Account