At age 65, you want to use your retirement account balance to buy a perpetuity that pays $40,000 per year forever. Your Fidelity rep tells you that the perpetuity will be priced using a rate of 5%.

You just turned 35. How much money should you put aside per year to reach this goal, starting now, assuming your investments will return 8% per year?

A. $9,405

B. $12,110

C. $7,062

D. $15,420

E. $10,201