Asked by
Lauren Smith
on Dec 12, 2024
Verified
If an individual or family began at age 25 paying funds into a tax-free investment account or pension earning a 7 percent real return, how much would they have to save annually in order for the funds to be worth a million dollars (measured in the purchasing power of today's dollar) when they reach age 65?
A) approximately $5,000 annually
B) approximately $10,000 annually
C) approximately $20,000 annually
D) approximately $50,000 annually
Real Return
The profit or income generated by an investment, adjusted for inflation, representing the true increase in purchasing power.
Purchasing Power
The financial ability to buy goods and services, often reflecting the effect of inflation and the relative cost of living.
- Realize the pivotal role of the present value concept in determining investment decisions.
- Grasp the essential conditions and considerations for investments to be financially profitable.
Verified Answer
ZA
Learning Objectives
- Realize the pivotal role of the present value concept in determining investment decisions.
- Grasp the essential conditions and considerations for investments to be financially profitable.