Randy Hill wants to retire in 20 years with $1,000,000. If he can earn 10% per year on his investments, how much does he need to deposit each year to reach his goal? Round your answer to the nearest dollar.
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$25,000 |
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$18,000 |
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$5,727 |
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$17,460 |
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None of these choices are correct. |
Let annual deposits be x
Future value of annuity = Annual amount*[{(1+r)^n - 1}/r]
Hence, 1,000,000 = x*[{(1.10)^20 - 1}/0.1]
1,000,000 = 57.274999x
x = $17,459.62
i.e. $17,460
Hence, the answer is $17,460
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