SOLUTION: Suppose you want to have $400,000 for retirement in 20 years. Your account earns 7% interest.
a) How much would you need to deposit in the account each month?
$
b) How mu
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Question 1203059: Suppose you want to have $400,000 for retirement in 20 years. Your account earns 7% interest.
a) How much would you need to deposit in the account each month?
$
b) How much interest will you earn?
Found 2 solutions by Theo, ikleyn:
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
20 years * 12 months per year = 240 months.
7% interest rate per year / 12 = .5833333333% per month.
present value = 0.
future value = 400,000
payments are made at the end of each year.
use the financial calculator at https://arachnoid.com/finance/
here are the results.
you will need to deposit 767.86 into the account at the end of each month for 240 months.
your total payments are 240 * 3,101.20 = 744,288.
your
Answer by ikleyn(52781) (Show Source): You can put this solution on YOUR website!
.
Suppose you want to have $400,000 for retirement in 20 years. Your account earns 7% interest.
a) How much would you need to deposit in the account each month?
b) How much interest will you earn?
~~~~~~~~~~~~~~~~~~~~~~~~~
The problem's formulation in the post is presented monstrously flippantly:
period of compounding is not given and the term "compounding" itself
even is not mentioned.
When I see a problem presented so / , I prefer do not touch it.
For future generation of students, who will see this post, I only want to point
that the total payment calculation in the post by @Theo is incorrect.
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