What Amount of Money Will Kevin Need to Have in 20

question 25

Multiple Choice

What amount of money will Kevin need to have in 20 years when he retires? His goal is to purchase an ordinary annuity that pays $1,000 per month for 30 years after he retires? Assume that after he retires the interest rate will be 7.2% compounded monthly.

• A) $226,581
• B) $350,550
• C) $104,728
• D) $147,321
• E) $360,000

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Definitions:

Binomial Theorem

A formula for expressing the powers of sums, which identifies the expansion of a binomial raised to any positive integer power.

Approximate

To estimate or come close to an actual value, not exact but within a reasonable range.

Binomial Coefficient

A numerical factor that represents the number of ways to choose a subset of elements from a larger set, commonly expressed as "n choose k."

Binomial Theorem

The binomial theorem describes the algebraic expansion of powers of a binomial, showing how to expand expressions that involve addition or subtraction within a power.