A couple wants to retire with $1 million in their 401[K] in 30 years. They decid
ID: 2796720 • Letter: A
Question
A couple wants to retire with $1 million in their 401[K] in 30 years. They decide to put invest $12,000 at the begining of each year, starting today, in the 401(K) and can earn 6% on all investments. Will they reach their goal?
No; they will be about $640,000 short.
No; they will be about $51,302 short.
Yes; they will be about $5,620 over.
Yes; they will be about $12,000 over.
No; they will be about $640,000 short.
No; they will be about $51,302 short.
Yes; they will be about $5,620 over.
Yes; they will be about $12,000 over.
Explanation / Answer
The amount deposited is an annuity due whose future value = 12000*1.06*(1.06^30-1)/0.06 = $ 1,005,620 Amount needed $ 1,000,000 Over by $ 5,620 Answer: Yes; they will be about $5,620 over.
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