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brilliants [131]
3 years ago
6

You want to save sufficient funds to generate an annual cash flow of $55,000 a year for 25 years as retirement income. You curre

ntly have no retirement savings but plan to save an equal amount each year for the next 38 years until your retirement. How much do you need to save each year if you can earn 7.5 percent on your savings?Select one:a. $3,333.33b. $2,640.85c. $3,146.32d. $2,889.04e. $3,406.16
Business
1 answer:
Fynjy0 [20]3 years ago
5 0

Answer:

The correct answer is $7,056.46

Explanation:

Giving the following information:

You want to save sufficient funds to generate an annual cash flow of $55,000 a year for 25 years as retirement income. How much do you need to save each year if you can earn 7.5 percent on your savings?

Final value= 55,000*25= 1,375,000

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

A= annual deposit

Isolating A:

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

A= (1,375,000*0.075)/[(1.075^38)-1]= $7,056.46

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