Present Value of Retirement Savings Goal

Very Hard Time Value Of Money Present And Future Value

Emily is planning for her retirement and wants to ensure she has sufficient funds when she retires in 30 years. She plans to save $5,000 annually at the end of each year in an investment account that earns an annual interest rate of 8%. To calculate the present value of her annual contributions, Emily wants to know how much she needs to invest today to reach her goal of $1,000,000 in 30 years, considering her contributions grow to a future value due to compounding interest.

Which of the following represents the correct present value calculation for Emily's retirement savings goal?

PV = $5,000 imes rac{(1 + 0.08)^{30} - 1}{0.08} imes (1 + 0.08)^{-30}

PV = rac{1,000,000}{(1 + 0.08)^{30}}

PV = rac{ ext{Future Value of Annuity}}{(1 + 0.08)^{30}} ext{ where Future Value of Annuity = } 5,000 imes rac{(1 + 0.08)^{30} - 1}{0.08}

Hint

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Correct935

% Correct54%