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Mary's 25th birthday is today, and she hopes to retire on her 65th birthday. She has determined that she will need to have $4,000,000 in her retirement savings account in order to live comfortably. Mary currently has no retirement savings, and her investments will earn 5% annually. How much must she deposit into her account at the end of each of the next 40 years to meet her retirement savings goal?

Respuesta :

Answer:

Annuity will be $33112.644  

Explanation:

We have given future value ( FV ) = $4000000

Rate of interest r = 5% = 0.05

Number of periods n = 40

We know that future value is given by [tex]Futurte\ value(FV)=\frac{A}{r}[(1+r)^n-1][/tex]

Here A is annuity

So [tex]4000000=\frac{A}{0.05}[(1+0.05)^{40}-1][/tex]

[tex]200000=A[(1+0.05)^{40}-1][/tex]

[tex]200000=A\times 6.0399[/tex]

[tex]A=$33112.644[/tex]

So annuity will be $33112.644

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