Your Finance Professor Suggests That You Should Have $3,000,000 in Your

Multiple Choice

Your finance professor suggests that you should have $3,000,000 in your retirement portfolio before you even THINK about retiring.Recently,your aunt sold valuable California real estate and handed you a check for $387,500.(This is the amount you have after paying taxes.She is now your favorite aunt.) How much of the $387,500 must you set aside today if you invest a portion of the money at an annual rate of 7.5% and you wish to retire in 38 years with the amount suggested by your finance professor?

A) $169,086
B) $192,132
C) $306,187
D) At an annual rate of return of 7.5.0%,$387,500 is not a large enough investment to reach the goal amount of $3,000,000 in 38 years.