Question

Suppose you want to have $600,000 for retirement in 25 years. Your account earns 6% interest. Round your answers to the nearest cent.

Answer 1

`\begin{gathered} A\text{ = P \lparen1 + }(0.06)/(1))^(25) \\ 600000\text{ = P \lparen1.06\rparen}^(25) \\ P\text{ = }(600000)/(4.29) \\ P\text{ = 139860.14\$ \lparen in 25 years\rparen} \\ P\left(annualy\right)\text{ = }(139860.14)/(25) \\ P\left(annualy\right)\text{ = \$5594.40} \\ P\left(monthly\right)\text{ = }(5594.40)/(12) \\ P\left(monthly\right)\text{ = \$466.2} \end{gathered}`

The formula from above is the compound interest formula

We need to deposit $466.2 every month in the account.

Interest earned = P(year)(0.06)(25)

Interest = 5594.4 (0.06) (25)

Interest = $8391.6