Question

Sophia wishes to retire at age 65 with $1,700,000 in her retirement account. When she turns 28, she decides to begin depositing money into an account with an APR of 9% . What is the monthly deposit that Sophia must make in order to reach her goal? Round your answer to the nearest cent

if necessary.

Answer 1

$1322.67

Explanation:

Answer 2

$1322.67

Explanation:

Let the total amount that Sarah deposited be $x

using the annuity formula:

A=P[((1+r)^n-1)/r]

A=future value

r=rate

n=number of years

from the information given:

A=$500000

r=2.75%

n=65-42=23 years

p=$x

thus plugging our values in the formula we get:

500000=x[((1+0.0275)^(23)-1)/(0.0275)]

500000=31.50x

x=15,872.04883

She deposited 15,873.04883 per year

The monthly deposit will therefore be:

15873.04883/12=$1322.67