|
Jack has $300,000 saved with 8 years left until retirement. Jack believes he can retire comfortably on $750,000. If an interest rate of 6% is reasonable, how much will Jack need to save each year to attain his goal.
Column
|
Rate
|
Years
|
Amount
|
Factor
|
Value
|
1
|
6.0%
|
8
|
$300,000
|
1.593848
|
$478,154
|
3
|
6.0%
|
8
|
$271,846
|
0.101036
|
$27,466
|
This is a two step problem:
| 1. | Use column one to find out how much Jack will have at the end of 8 years from his investment of the initial $300,000. He will have $478,154 and will need an additional $271,846 to meet his retirement goal. |
| 2. | Use column three to determine how much he will have to save each year to save the additional money needed. |
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