To compute how much you would need to save each year for the next 25 years to allow you to withdraw $20,000 for the following 30 years,you would need to use the
A)Future Value of an annuity.
B)Present Value of an annuity.
C)both Future and Present Value of an annuity.
D)both Present and Future Value of $1.

Question

Quizplus · Accepted Answer

To solve this problem, you need to calculate the present value of the withdrawals (an annuity) to determine how much you need at the start of the withdrawal period. Then, you use the future value of an annuity to determine how much you need to save each year to reach that amount.

To Compute How Much You Would Need to Save Each