Answer:
The total required amount is $7,056.46
Explanation:
Given the following details:
You aim to accumulate enough savings to produce an annual cash flow of $55,000 for 25 years during retirement. How much should you save each year, assuming a return of 7.5 percent on your savings?
Final value = 55,000 * 25 = 1,375,000
Using the formula: FV = {A*[(1+i)^n-1]}/i
A represents the annual contribution.
To isolate A:
A = (FV*i)/{[(1+i)^n]-1}
A = (1,375,000*0.075)/[(1.075^38)-1]= $7,056.46
