Question

Suppose you want to have $ 300,000 for retirement in 35 years: Your account earns 10% interest How much would you need to depost in the account each month?

Answer 1

To have $300,000 for retirement in 35 years with a 10% interest rate, you would need to deposit approximately $242.40 into the account each month.

Step-by-step explanation:

To calculate how much you would need to deposit in the account each month, we can use the formula for compound interest. The formula is: A = P(1 + r/n)^(nt), where A is the future value of the investment, P is the principal (the amount deposited each month), r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years. In this case, we want to solve for P. So the formula becomes: $300,000 = P(1 + 0.10/12)^(12*35). Now we can solve for P by dividing both sides of the equation by (1 + 0.10/12)^(12*35).

Using a calculator or spreadsheet software, we find that P is approximately $242.40. Therefore, you would need to deposit approximately $242.40 into the account each month to have $300,000 for retirement in 35 years at a 10% interest rate compounded annually.