Jerry wishes to retire in 5 years with $1 million in his bank account. If the account pays 4% and his current balance is $500,000, how much must he deposit at the beginning of each of the next five years for his wish to come true? The amount must be the same each year
What will be an ideal response?
His current accumulation will grow to $608,326.45, leaving him $391,673.55 short. To get this, he will save X at the beginning of each of the next five years so that $391,673.55 = X[(1.04 ) + (1.04)2 + (1.04)3 + (1.04)4 + (1.04)5] = X[5.63292]. X = $69,532.95.
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