SOLUTION: Suppose that you’d like to retire in 40 years and you want to have a future value of $ 800000 in a savings account. Also suppose that your employer makes regular monthly payments

Question 1198973: Suppose that you’d like to retire in 40 years and you want to have a future value of $ 800000 in a savings account. Also suppose that your employer makes regular monthly payments into your retirement account.
If you can expect an APR of 6% for your account, how much do you need your employer to deposit each month?
Employer Contribution =
The formulas we have been using assume that the interest rate is constant over the period in question. Over a period of 40 years, though, interest rates can vary widely. To see what difference the interest rate can make, let’s assume a constant APR of 2% for your retirement account. How much do you need your employer to deposit each month under this assumption?
Employer Contribution =
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
at 6% compounded monthly, your employer will need to contribute 401.71 at the end of each month for 40 years (480 months).
at 2% compounded monthly, your employer will need to contribute 1089.27 at the end of each month for 40 years (480 months).

online calculator that does this is found as https://arachnoid.com/finance/

these are the results:

40 years * 12 months per year = 480 months.
6% per year / 12 = .5% per month
2% per hear / 12 = .16666666666....% per month.
pay is negative because it is what you are paying.
future value is positive because it is what you are reciving.
RELATED QUESTIONS
Suppose that you’d like to retire in 40 years and you want to have a future value of $... (answered by ikleyn)

Suppose you get $1000 as a tax refund this year,and deposit in a retirement account... (answered by Theo)

How much each year would you have to put into a savings account, paying 7% interest, so (answered by Alan3354)

You plan to work for 40 years and then retire using a 25-year annuity. You want to... (answered by ikleyn)

You would like to start saving for retirement. Assuming you are now 50 years old and you... (answered by rfer)

You have a saving $350,000 in a retirement account that earns 4.8% annual interest. You... (answered by Theo)

You are trying to plan for retirement in 20 years and currently have $85,000 in a savings (answered by solver91311)

Correct Anwers? You would like to have $750,000 when you retire in 25 years. How much (answered by Boreal)

You want to be able to withdraw $40,000 from your account each year for 25 years after... (answered by greenestamps)