Assume that Don is 45 years old and has 20 years for saving until he retires. He expects an APR of 8.5% on his investments
How much does he need to save if he puts money away annually in equal end-of-the-year amounts to achieve a future value of one million dollars in 20 years' time?
A) $20,570.00
B) $20,670.97
C) $20,770.90
D) $20,800.00
Answer: B
Explanation: B) Using the FVIFA formula for r = 8.50% and n = 20, we get FVIFA = 48.377013. The annuity payment we need to put away each year is: PMT = = = $20,670.97.
MODE = END
INPUT 20 8.5 0 ? -1,000,000
KEY N I/Y PV PMT FV
CPT 20,670.97
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