Ian would like to save $2,000,000 by the time he retires in 30 years. if he believes that he can achieve a 6% rate of return, how much does he need to deposit each year, starting one year from now, to achieve his goal? $12,065 $5,790 $37,500 $25,298

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Danica Perez

24 November, 22:16

Ian would like to save $2,000,000 by the time he retires in 30 years. if he believes that he can achieve a 6% rate of return, how much does he need to deposit each year, starting one year from now, to achieve his goal? $12,065 $5,790 $37,500 $25,298

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Brent Hardin · Answer 1

The future worth of the periodic payment, in this case, annual, can be calculated through the equation,

FV = P x ((1 + r) ^n - 1) / r))

where FV is the future value, P is the periodic payment, r is the interest rate, and n is the number of years. Substituting the known values,

2,000,000 = P x ((1 + 0.06) ^30 - 1) / 0.06))

The value of P from the equation is $25,297.82

Hence, the answer to this item is the fourth choice.