# If you plan to save $9,800 every year for retirement for 30 years. Assuming that you earn a 9%... ## Question: If you plan to save$9,800 every year for retirement for 30 years. Assuming that you earn a 9% return on your investment, compounded annually, how much money will you have when you retire?

A) $100,682 B)$320,460

C) $313,747 D)$1,335,814

E) $130,023 ## Future Value of Annuity An annuity is a series of periodic payments in a deposit that earns a certain amount of interest. The objective of annuity is to accumulate a lump-sum for a future date. This is generally used for retirement savings or for planning education funding. ## Answer and Explanation: 1 Given - • Annual Saving =$9,800
• Time = 30 years
• Rate = 9% = 0.09

The formula for calculating future value of annuity is as follows -

• Future Value of Annuity = P * { ( 1 + r ) ^ n - 1 / r }

Therefore,

• Future Value of Annuity = 9800 * { ( 1 + 0.09 ) ^ 30 - 1 / 0.09 }

Or,

• Future Value of Annuity = 9800 * 136.3075

Or,

• Future Value of Annuity = $1,335,814 Therefore, the correct answer is - • Option (D)$1,335,814