Statistics, Modeling and Finance Practice Exam

Question: 1 / 400

How much do you need to invest annually, at 5.2%, to reach retirement savings of $130,988.87 in 11 years?

$1,067.88

$1,149.35

To determine how much you need to invest annually to reach a specific retirement savings goal, you can use the future value of an annuity formula, which is commonly applied in finance. The formula is:

\[

FV = P \frac{(1 + r)^n - 1}{r}

\]

where:

- \(FV\) is the future value of the annuity (in this case, $130,988.87),

- \(P\) is the annual payment (the amount you are trying to find),

- \(r\) is the annual interest rate (5.2%, or 0.052 when expressed as a decimal),

- \(n\) is the number of years (11 years in this case).

Rearranging the formula to solve for \(P\), we have:

\[

P = \frac{FV \cdot r}{(1 + r)^n - 1}

\]

Plugging in the values:

- \(FV = 130,988.87\)

- \(r = 0.052\)

- \(n = 11\)

Calculating:

1. Calculate \((1 + r)^n\):

\[

(1 + 0

Get further explanation with Examzify DeepDiveBeta

$1,347.80

$1,439.11

Next Question

Report this question

Download Statistics, Modeling and Finance Practice Exam PDF Study Guide
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy