Mr. Hopper is expected to retire in 30 years and he wishes accumulate $1,000,000 in his retirement fund by that time. If the interest rate is 12% per year, how much should Mr. Hopper put into the retirement fund each year in order to achieve this goal?
A) $4,143.66
B) $8,287.32
C) $4,000
D) None of the above

Question

Quizplus · Accepted Answer

To find the annual payment, we use the future value of an annuity formula: FV = Pmt * [(1 + r)^n - 1] / r. Solving for Pmt, we get Pmt = FV / [(1 + r)^n - 1] / r. Plugging in FV = $1,000,000, r = 0.12, and n = 30, we find Pmt ≈ $4,143.66.

Mr Hopper Is Expected to Retire in 30 Years and He