SOLUTION: 1.Betty, who has just started her first full-time salary job is determined to have $1 million in her account by the time she retires. She is now 25 and hopes to retire at 65 years

Question 1065816: 1.Betty, who has just started her first full-time salary job is determined to have $1 million in her account by the time she retires. She is now 25 and hopes to retire at 65 years of age. Her investments have been earning 5% annual return, which could appropriately be calculated as compounded monthly, and she thinks it�s realistic that can be maintained. How much would Betty have to put aside each month, in order to reach her goal?
2.Aya and Harumi would like to buy a house and their dream house costs $500,000. They have $50,000 saved up for a down payment but would still need to take out a mortgage loan for the remaining $450,000 and they�re not sure whether they could afford the monthly payments. The bank has offered them an interest rate of 3.5%, compounded monthly. How much would they have to be able to afford to pay each month in order to pay off her mortgage in 30 years?
Found 2 solutions by addingup, MathTherapy:
Answer by addingup(3677) (Show Source): You can put this solution on YOUR website!
40 years
1,000,000
5% annual return compounded monthly
-------------------------
1,000,000((0.05/12)/(((1+(0.05/12))^(12*40)-1)
1,000,000(0.00417/((1.0042^480)-1)
1,000,000(0.00417/(7.477-1)) = 643.817
She has to save 643.82 per month.
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John
Answer by MathTherapy(10552) (Show Source): You can put this solution on YOUR website!

1.Betty, who has just started her first full-time salary job is determined to have $1 million in her account by the time she retires. She is now 25 and hopes to retire at 65 years of age. Her investments have been earning 5% annual return, which could appropriately be calculated as compounded monthly, and she thinks it�s realistic that can be maintained. How much would Betty have to put aside each month, in order to reach her goal?
2.Aya and Harumi would like to buy a house and their dream house costs $500,000. They have $50,000 saved up for a down payment but would still need to take out a mortgage loan for the remaining $450,000 and they�re not sure whether they could afford the monthly payments. The bank has offered them an interest rate of 3.5%, compounded monthly. How much would they have to be able to afford to pay each month in order to pay off her mortgage in 30 years?

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