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3. You have decided to begin saving for retirement. You are currently 20 years old and you would like to retire when you are 65. Your goal is to have $3 million when you retire. How much will you need to put away each year to reach your goal assuming that you will make equal payments starting 1 year from now and ending when you retire and that you will earn 12% on your money

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facundobuzzetti

Answer:

Annual deposit= $2,475.63

Explanation:

Giving the following information:

Future Value= $3,000,000

Number of periods= 44

Interest rate= 0.12 compounded annually

To calculate the annual deposit, we need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

Isolating A:

A= (FV*i)/{[(1+i)^n]-1}

A= (3,000,000*0.12) / [(1.12^44) - 1]

A= $2,475.63