Question

You want to retire exactly 40 years from today with $1,910,000 in your retirement account. If you think you can earn an interest rate of 9.91 percent compounded monthly, how much must you deposit each month to fund your retirement?

Answer 1

The amount to deposit in the first month will be $35708.91

Step-by-step explanation:

The formula to apply here is:

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

where

A=future value of loan including interest

P=Initial deposit

r=annual interest rate in decimal

n=number of times interest is compounded per unit t

t=time money is borrowed

Given in the question;

t=40 yrs

A=$1910000

r=9.99% =0.0999

n=12

P=?

Applying the formula to find P

`P=A/(1+(r)/(n))^(nt) \\\\P=1910000/(1+(0.0999)/(12) )^(12*40) \\\\\\P=1910000/(1.008325)^(480) \\\\\\P=1910000/54.49\\\\\\P=35708.91`

The amount to deposit in the first month will be $35708.91