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You are planning your retirement and you come to the conclusion that you need to have saved $1000000million in 30 years. You can invest into an retirement account that guarantees you a 12% annual return. How much do you have to put into your account at the end of each year to reach your retirement goal?

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facundobuzzetti

Answer:

Annual deposit= $4,143.66

Explanation:

Giving the following information:

You need to have saved $1,000,000 in 30 years. You can invest in a retirement account that guarantees you a 12% annual return.

To calculate the annual deposit needed to achieve the objective, we need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

Isolating A:

A= (FV*i)/{[(1+i)^n]-1}

A= (1,000,000*0.12)/ [(1.12^30)-1]= $4,143.66

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