Question

You want to retire exactly 30 years from today with $1,950,000 in your retirement account. If you think you can earn an interest rate on 10.07 percent compounded monthly, how much must you deposit each month to fund your retirement

Answer 1

Monthy deposit= $849.78

Step-by-step explanation:

Giving the following information:

Future value (FV)= $1,950,000

Number fo periods (n)= 30*12= 360

Interest rate (i)= 0.1007/12= 0.008392

To calculate the monthly deposit, we need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= monthly deposit

Isolating A:

A= (FV*i)/{[(1+i)^n]-1}

A= (1,950,000*0.008392) / [(1.008392^360) - 1]

A= $849.78