Suppose that you are beginning an investment plan.You have decided that you want to retire in 30 years with $1,000,000 in your bank account at that time.How much would you need to invest at the end each of the next 30 years if you could earn 8%?
A)$11,924,613.33
B)$83,860.16
C)$46,030.93
D)$22,045.16
E)$8,827.43

Question

Quizplus · Accepted Answer

To find out how much you need to invest each year to reach $1,000,000 in 30 years at an 8% annual interest rate, you can use the future value of an annuity formula: FV = P * [((1 + r)^n - 1) / r], where FV is the future value ($1,000,000), P is the annual payment, r is the annual interest rate (0.08), and n is the number of payments (30). Rearranging the formula to solve for P gives you the annual investment required. Plugging in the numbers, you find that the correct answer is approximately $8,827.43, which matches choice E.

Suppose That You Are Beginning an Investment Plan