Question

2. The million-dollar question! Suppose you

want to have $1,500,000 for retirement in
30 years. If you deposit the same amount
each month into an annuity that earns 6%
interest annually (and compounded
monthly),

what is the amount you need to
deposit each month?

Show your work
using the formula.

Answer 1

the guys above me is correct

Explanation:

because i did it and the answer was correct for me

Answer 2

The formula to calculate the monthly payment needed to achieve a future value in an annuity is:

PMT = FV * (r / 12) / [(1 + r / 12)^(n * 12) - 1]

where PMT is the monthly payment, FV is the future value, r is the annual interest rate (as a decimal), and n is the number of years.

In this case, FV = $1,500,000, r = 0.06, and n = 30. Plugging these values into the formula, we get:

PMT = $1,500,000 * (0.06 / 12) / [(1 + 0.06 / 12)^(30 * 12) - 1]

PMT = $1,500,000 * 0.005 / [1.06^(360) - 1]

PMT = $1,500,000 * 0.005 / 5.743

PMT = $1,244.23 (rounded to the nearest cent)

Therefore, the amount that needs to be deposited each month to achieve a future value of $1,500,000 in 30 years is $1,244.23.