Answer:
$13232.50 should be set aside each year
Explanation:
given data
save = $2 million
by time = 65 year
today age = 22
interest rate = 5%
to find out
how much must you set aside each year to make sure that you will have $ 2 million
solution
we know here number of payment will be
no of payment = 65 - 22 + 1
+1 is add here because 1st payment is today
no of payment = 44
so future value formula is
future value = present payment [tex]\frac{(1+r)^t -1 }{r}[/tex] .............1
put here value here r is rate and t is no of payment
$2 million = present payment [tex]\frac{(1+0.05)^44 -1 }{0.05}[/tex]
present payment = 13232.50
so $13232.50 should be set aside each year
