Assume your goal in life is to retire with $2,500,000.How much would you need to save at the end of each year if interest rates average 7% and you have a 20-year work life?
A) $30,130
B) $60,983
C) $250,205
D) $832,952

Question

Quizplus · Accepted Answer

To retire with $2,500,000 in 20 years with an average interest rate of 7%, we need to use the formula for Future Value of an Annuity:

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

where:
PMT = the amount needed to be saved each year
r = the annual interest rate
n = the number of periods

Substituting the given values, we get:

$2,500,000 = PMT x ((1 + 0.07)^20 - 1) / 0.07

Solving for PMT, we get:

PMT = $60,983

Therefore, the amount needed to be saved at the end of each year is $60,983. Hence, the correct answer is B.

Assume Your Goal in Life Is to Retire with $2,500,000