How much will you need to invest annually to reach a savings goal of $300,000 at the end of 25 years, if you invest in an annuity that pays 5% interest, compounded annually? Enter your answer rounded to the nearest hundred dollars.

To calculate how much you need to invest annually to reach your savings goal of $300,000 after 25 years with an interest rate of 5% compounded annually, we can use the **future value of an ordinary annuity** formula:

\[
FV = P \times \left( \frac{(1 + r)^n - 1}{r} \right)
\]

Where:
- $FV$ = Future value ($300,000)
- $P$ = Annual payment (what we're solving for)
- $r$ = Annual interest rate (5% = 0.05)
- $n$ = Number of years (25)

Rearranging the formula to solve for $P$:

\[
P = \frac{FV}{\left( \frac{(1 + r)^n - 1}{r} \right)}
\]

Let's calculate the value now.

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Here are 5 related questions you might find helpful:
1. How does compound interest affect long-term investments?
2. What is the difference between ordinary annuities and annuities due?
3. How do different interest rates impact the amount needed to invest annually?
4. Can I adjust my savings goal if I start later but want to invest more?
5. How does the number of compounding periods affect the growth of investments?

**Tip:** Consistency in investing, even with small amounts, can have a big impact over time due to compound interest.

How much will you need to invest annually to reach a savings goal of $300,000 at the end of 25 years, if you invest in an annuity that pays 5% interest, compounded annually? Enter your answer rounded to the nearest hundred dollars.

Discover how to calculate the annual investment needed to reach a savings goal of $300,000 in 25 years with a 5% interest rate, compounded annually. This guide explores key concepts such as future value of annuities and compound interest, and includes the necessary formulas to find the solution. Suitable for students in Grades 10-12.

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