question archive Jeff is saving for his retirement
Jeff is saving for his retirement
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Jeff is saving for his retirement. He wants to have $1,000,000 in his retirement fund exactly 25 years from now, and he believes he can earn 8% per year on his money between now and then. If he invests an equal amount at the end of each of the next 25 years, how much should each amount be?
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The amount is computed as shown below:
Future value = Annual amount x [ [ (1 + r)n – 1 ] / r ]
$ 1,000,000 = Annual amount x [ [ (1 + 0.08)25 - 1 ] / 0.08 ]
$ 1,000,000 = Annual amount x 73.10593995
Annual amount = $ 1,000,000 / 73.10593995
Annual amount = $ 13,678.78
