You Would Like to Have Enough Money Saved to Receive

question 66

Multiple Choice

You would like to have enough money saved to receive a growing annuity for 20 years, growing at a rate of 5 percent 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 percent.

• A)$1,000,000.00
• B)$425,678.19
• C)$605,604.20
• D)$827,431.28

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Definitions:

Big Mac Index

An informal measure of currency exchange rates using the price of a McDonald's Big Mac as a benchmark to compare the purchasing power parity between two currencies.

The Economist

A renowned international weekly newspaper that focuses on current affairs, international business, politics, technology, and culture.

Exchange Rates

The price of foreign currency; for example, how many dollars we must give up in exchange for marks, yen, and pounds.

Balance Of Payments

A record of all economic transactions between residents of a country and the rest of the world in a given period.