Question

You want to be able to withdraw $25,000 from your account each year for 25 years after you retire. You expect to retire in 15 years. If your account earns 4% interest, how much will you need to deposit each year until retirement to achieve your retirement goals?

Answer 1

Answer:

$375.49

Step-by-step explanation:

- This question tests our knowledge of annuities

-Given the desired final amount is $25,000, the term is n=25 and the interest rate is 4%, the principal amount invested can be calculated as:

$A=\frac{P(1+i)^n-1}{i}\\\\25000=\frac{P(1.04)^{25}-1}{0.04}\\\\\\=375.49$

Hence, the annual deposits are $375.49