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

Finance Dec 26, 2020

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%?

Expert Solution

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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