So they both need $1,875,000, and are able to earn 8% of that.
First we need to calculate how much 8% of $1,875,000 is. To do this, convert the percent into a decimal (0.08) or fraction (8/100 = 2/25) and then multiply that by $1,875,000.
0.08 * 1,875,000 = $150,000
Gordan and Lisa are able to earn $150,000 out of the $1,875,000 that they need. The rest of the money required is the amount that they should save up. How do we figure that out? Subtract that 8% that they earned ($150,000) from $1,875,000.
1,875,000 - 150,000 = $1,725,000
So Gordan and Lisa need to save $1,725,000 annually.