# How much money do you need to deposit into an account annually, if you desire $2 million dollars... ## Question: How much money do you need to deposit into an account annually, if you desire$2 million dollars in 40 years? Assume a 6% annual interest rate and annual compounding. Your first deposit will begin at the end of your first year.

Let

• FVA = the future value desired = $2,000,000 • PMT be the periodic payment • r be the interest rate = 6% • n be the number of period = 40 We will use the annuity future value formula to determine the annual deposit: {eq}FVA=PMT*\frac{(1+r)^{n}-1}{r}\\ 2,000,000=PMT*\frac{(1+0.06)^{40}-1}{0.06}\\ PMT=\$12,923.07\\ {/eq}

The annual deposit required is \$12,923.07.