Approximately How Much Must Be Saved for Retirement in Order

question 38

Multiple Choice

Approximately how much must be saved for retirement in order to withdraw $100,000 per year for the next 25 years if the balance earns 8% annually,and the first payment occurs one year from now?

• A) $1,067,477.62
• B) $1,128,433.33
• C) $1,487,320.09
• D) $1,250,000.00

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Definitions:

Critical Value

A point on a statistical distribution that is compared with the test statistic to determine whether to reject the null hypothesis.

Test Statistic

A numerical value calculated from sample data, used in hypothesis testing to determine whether to reject the null hypothesis.

Null Hypothesis

A default position that indicates no difference or no effect, set to be tested and possibly rejected in favor of an alternative hypothesis.

Test Statistic

A value calculated from sample data during a hypothesis test used to make a decision about the null hypothesis.