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Homework answers / question archive / You are starting to save for your retirement, which you plan to take in 30 years

You are starting to save for your retirement, which you plan to take in 30 years

Finance

You are starting to save for your retirement, which you plan to take in 30 years. How much must you save each year for the next 30 years in order to have $5,000,000 waiting for you, assuming a compound interest rate of 5%?

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Future value of annuity=Annuity[(1+rate)^time period-1]/rate

5,000,000=Annuity*[(1.05)^30-1]/0.05

5,000,000=Annuity*66.4388475

Annuity=5,000,000/66.4388475

=$75257.18(Approx)

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