Question

You decide that you want to save 767,393 dollars for retirement. Assuming that you are 25 years old today, will retire at the age of 65, and can earn a 8 percent annual interest rate on your deposits, how much must you deposit each year to meet your retirement goal? (your first deposit will be one year from now and your last deposit will be 40 years from today, i.e. 40 deposits) Hint : The number of years for FVIFA computation will be 40 years

Answer 1

Table Approach:

n = 40, FV = $767,393, r = 8%

Now, using the FVIFA table

So, the FVIFA = 259.057 (marked in the table above)

Amount to be deposited every year = $767,393/259.057 = $2,962.26