Mia finds a CD with 2.5% APR compounded annually. How much money will Mia need to invest in this CD if she wants to have a yearly income of $40,000 when she retires? A. $1,600,000 B. $1,800,000 C. $1,500,000 D. $1,200,000

Mia will need to invest A. $1,600,000 to get a yearly income of $40,000.

Step-by-step explanation:

Step 1; Mia finds a CD which has a 2.5% interest over a year. So Mia will get back 2.5% of the amount invested into the CD. So we need to calculate how much 2.5% of 1,600,000, $1,800,000, $1,500,000 and $1,200,000 are. To do this we convert 2.5% into a fraction and multiply it with the value.

Step 2;

2.5% of $1,600,000 = × $1,600,000 = $40,000.

2.5% of $1,800,000 = × $1,800,000 = $45,000.

2.5% of $1,500,000 = × $1,500,000 = $37,500.

2.5% of $1,200,000 = × $1,200,000 = $30,000.

So she will have to invest A. $1,600,000 to get a yearly income of $40,000 when she retires.

step-by-step explanation:

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