Question

Daniel Jackson is 30 years and wants to retire when he is 65. So far he has saved (1) $6,730 in an IRA account in which his money is earning 8.3 percent annually and (2) $5,590 in a money market account in which he is earning 5.25 percent annually. Daniel wants to have $1 million when he retires. Starting next year, he plans to invest the same amount of money every year until he retires in a mutual fund in which he expects to earn 9.83 percent annually. How much will Daniel have to invest every year to achieve his savings goal? (Round answer to 2 decimal places, e.g. 15.25.) Daniel will have to save $

Answer 1

6730*1.083^35+5590*1.0525^35+x/9.83%*(1.0983^35-1)=1000000

=>x=(1000000-(6730*1.083^35+5590*1.0525^35))*9.83%/(1.0983^35-1)
=>x=3287.35027

We see that Daniel will have to save 3287.35027 per year