Question

You wish to retire in 30 years and determine that you will need $1,000,000 to fund your retirement. If you can invest with a return of 8% you will need to invest ________ each year to reach your goal.

Answer 1

Answer:

you will need to invest $8827.43 each year  

Explanation:

given data

time t = 30 year

future value = $1,000,000

return r = 8%

solution

we apply here future value of annuity that is express as

future value of annuity = annuity × $\frac{(1+r)^t-1}{r}$    ..................1

put here value

$1,000,000 = annuity × $\frac{(1+0.08)^{30}-1}{0.08}$  

solve it we get

annuity = $8827.43

so you will need to invest $8827.43 each year