You are currently 25 and would like to retire at age 45. You plan to save by making equal investments of $10,000 at the end of each year for the next 20 years. If you are able to earn 8% per year on your investments, how much will you have at the end of the 20 years? Please refer to the table below:

Question

Quizplus · Accepted Answer

Using the formula for future value of an annuity, we have FV = PMT * ((1 + r)^n - 1) / r, where PMT is the yearly investment, r is the interest rate, and n is the number of years. Plugging in the values given, we get FV = 10,000 * ((1 + 0.08)^20 - 1) / 0.08 = $457,600, which is closest to choice C.

You Are Currently 25 and Would Like to Retire at Age