In: Finance

# Finance- Time Value of Money

You believe you will need to have saved $500,000 by the time you retire in 40 years in order to live comfortably. If the interest rate is 6 percent per year, how much must you save each year to meet your retirement goal? ## Solutions ##### Expert Solution Given Data: Amount= 500,000 n= 40 years Interest Rate= 6% Using Formula: Future Value: Pv X r / (1+r)^n-1 = 500,000 X 0.06 / (1 + 6 % ) ^ 40 - 1 = 500,000 X 0.06 / (1 + 0.06 % ) ^ 40 - 1 = 30,000 / 9.2857 =$3230.77

The answer will be $3230.77$3230.77 must be saved each year to meet the retirement goal

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