Question

You have 40 years left until retirement and you want to retire with $3,350,000 saved. You plan to deposit 400 dollars into the account each month beginning one month from today. You currently have $10,000 saved.

Calculate the rate of return (APR) you would have to earn to reach your retirement goal. (Enter percentages as decimals and round to 4 decimals)

Answer 1

Step-by-step explanation:

You can solve this using a financial calculator. I'm using TI BA II plus ;

N = 40*12 = 480 months

PV = -10,000

PMT = -400

FV = 3,350,000

then CPT I/Y = 0.856% (this is a monthly rate)

Next, to find the APR, multiply monthly rate by 12;

APR = 0.856% *12 = 10.275%

To "enter percentages as decimals and round to 4 decimals", APR =0.1028