Question

Assume that Ray is 38 years old and has 27 years for saving until he retires. He expects an APR of​ 7.5% on his investments. How much does he need to save if he puts money away annually in equal endminusofminustheminus year amounts to achieve a future value of​ $1,200,000 dollars in 27​ years' time

Answer 1

Answer:

$14,882.44.

Explanation:

Given

Future value= $1,200,00

Time= 27 years

Interest rate= 7.5%

let PV= present value

The question is solved by computing the amount of annual deposit.

Enter the below in a financial calculator to compute the amount of annual deposit:

FV= 1,200,000

N= 27

I/Y= 7.5

PV= FV÷(1+I)^N

putting values we get

PV= $1,185,117.56

Now Benefit = FV- PV= 1,200,000-1,185,117.85= $14,882.44.

Therefore, the amount of annual deposit is $14,882.44.