Question

You want to be a millionaire when you retire in 40 years. a. How much do you have to save each month if you can earn an annual return of 9.7 percent

Answer 1

the amount that saved each month is $173.21

Step-by-step explanation:

The computation of the amount that saved each month is as follows:

Here we use the PMT formula

Given that

NPER = 40 × 12 = 480

PMT = 9.7% ÷ 12 = 0.81%

PV = $0

FV = $1,000,000

The formula is shown below:

= PMT(RATE;NPER;PV;-FV;TYPE)

The future value comes in negative

After applying the above formula, the pmt is $173.21

Hence, the amount that saved each month is $173.21