You would like to have enough money saved to receive a growing annuity for 20 ye

Question

You would like to have enough money saved to receive a growing annuity for 20 years, growing at a rate of 5% per year, with the first payment of 50,000 occurring exactly one year after retirement. How much would you need to save in your retirement fund to achieve this goal? (The interest rate is 10%)

A.      1,000,00

B.      425,678.19

C.      605,604.2

D.      827,431.28

You would like to have enough money saved to receive a growing annuity for 20 years, growing at a rate of 5% per year, with the first payment of 50,000 occurring exactly one year after retirement. How much would you need to save in your retirement fund to achieve this goal? (The interest rate is 10%)

Explanation / Answer

B. 425,678.19

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