You want to have $5 million when you retire in 40 years. You believe you can earn 9% per year on your investment. How much must you invest each year to achieve your goal when you retire? (Ignore all taxes)

Question

Quizplus · Accepted Answer

This can be solved using the formula: Payment = (Future Value / (((1+interest rate)^number of years) - 1)) * (1+interest rate)^(-1). Plugging in the given values, we get Payment = (5,000,000 / (((1+0.09)^40) - 1)) * (1+0.09)^(-1) = $14,798. Therefore, the best choice is C.

You Want to Have $5 Million When You Retire in 40