What annual rate of return would Jia need to earn if she deposits $20,000 per year into an account beginning one year from today in order to have a total of $1,000,000 in 30 years?
A) 2.3%
B) 3.3%
C) 1.3%
D) 4.3%

Question

Quizplus · Accepted Answer

To calculate the annual rate of return, we can use the present value formula: 
PV = (PMT x [(1 + r)^n - 1] / r) x (1 + r)
Where PV = present value (which is $0 because we are starting with $20,000 one year from now), PMT = payment per year ($20,000), r = annual rate of return, and n = number of years (30).
Solving for r, we get approximately 3.3%. Therefore, Jia would need to earn an annual rate of return of 3.3% to have a total of $1,000,000 in 30 years, assuming she deposits $20,000 per year starting one year from today.

What Annual Rate of Return Would Jia Need to Earn