Question

use the savings plan formula to answer the following question. at age 43, you start saving for retirement. if your investment plan pays an APR of 7% and you want to have $1.4 million when you retire in 22 years, how much should you deposit monthly? you should invest $__ each month.

Answer 1

To find the monthly deposit amount for retirement, we can use the savings plan formula. Plugging in the given values, the monthly deposit comes out to be approximately $976.77.

Step-by-step explanation:

To answer this question, we can use the savings plan formula. The formula is given by:

A = P * (1 + r/n)^(nt)

where:

• A is the future value of the investment
• P is the monthly deposit amount
• r is the annual interest rate (in decimal form)
• n is the number of times interest is compounded per year
• t is the number of years

Plugging in the given values, we have:

1,400,000 = P * (1 + 0.07/12)^(12*22)

Simplifying, we get:

P ≈ 1,400,000 / (1 + 0.07/12)^(12*22)

Using a calculator, we find that the monthly deposit should be approximately $976.77 to reach the desired retirement amount.