Question

You are saving for retirement. To live comfortably, you decide you will need to save $1 million by the time you are 60. Today is your 20th birthday, and you decide, starting today and continuing on every birthday up to and including your 60th birthday, that you will put the same amount into a savings account. If the interest rate is 3%, how much must you set aside each year to ensure that you will have $1 million in the account on your 60th birthday?

Answer 1

the pmt is $12,712.41

Step-by-step explanation:

The computation of each year amount is given below:

Here PMT formula should be applied

Given that

RATE = 3%

NPER = 60 - 20 + 1 = 41

PV = 0

FV = $1,000,000

The formula is shown below:

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

The present value comes in negative

After applying the above formula, the pmt is $12,712.41