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In: Finance

peter wants to retire in 20 years. his investment goal at retirement is 2,000,000. how much...

peter wants to retire in 20 years. his investment goal at retirement is 2,000,000. how much must he invest and the beginning of each year to reach his goal if the average rate of return us 12 percent?

Solutions

Expert Solution

Future Value of an Annuity Due
= C*[(1+i)^n-1]/i] * (1+i)
Where,
c= Cash Flow per period
i = interest rate per period
n=number of period
2000000= C[ (1+0.12)^20 -1 /0.12] * (1 +0.12)
2000000= C[ (1.12)^20 -1 /0.12] * 1.12
2000000= C[ (9.6463 -1 /0.12] * 1.12
C =24783.54
Correct Answer = $24783.54

jeff jeffy answered 1 year ago
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