SOLUTION: Suppose you want to have $400,000 for retirement in 20 years. Your account earns 4% interest.
a) How much would you need to deposit in the account each month?
b) How mu
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Question 1188625: Suppose you want to have $400,000 for retirement in 20 years. Your account earns 4% interest.
a) How much would you need to deposit in the account each month?
b) How much interest will you earn?
Answer by Solver92311(821) (Show Source): You can put this solution on YOUR website!
Sunday, April 2, 2017
7:06 PM
It depends on whether you intend to make your first payment at the end of the first month (regular annuity) or today (annuity due).
For a regular annuity:
}{\(1\,+\,\frac{r}{n}\)^{nt}\ -\ 1})
where 
is the periodic payment, 
is the future value, 
is the interest rate as a decimal fraction, 
is the number of payments per year, and 
is the number of years of the investment.
For an annuity due:
}{\(1\, +\,\frac{r}{n}\)^{nt}\ -\ 1}\)\(\frac{1}{1\,+\,\frac{r}{n}}\))
For this problem:
The amount of interest earned is:
)
You can do your own arithmetic
John
My calculator said it, I believe it, that settles it
From
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