SOLUTION: How much money do I have to deposit in my account every 4 weeks in order to make one million dollars in 45 years if the yearly interest is 8 percent?

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Question 877581: How much money do I have to deposit in my account every 4 weeks in order to make one million dollars in 45 years if the yearly interest is 8 percent?
Answer by jim_thompson5910(35256) About Me  (Show Source):
You can put this solution on YOUR website!
Note: I'm assuming you're compounding interest monthly

Use this formula:

FV = P*( (1+i)^(n) - 1 )/i

where,

FV = future value
P = amount deposited per period
i = interest rate per period
n = number of periods

In this case,

FV = 1,000,000 (the amount we want)
P = unknown (we're solving for this)
i = (8%)/(12) = (0.08)/12 = 0.00666666666666667
n = 45*12 = 540

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FV = P*( (1+i)^(n) - 1 )/i

1000000 = P*( (1+0.00666666666666667)^(540) - 1 )/0.00666666666666667

1000000 = P*(5274.53989145722)

1000000/(5274.53989145722) = P

189.589996583328 = P

P = 189.589996583328

P = 189.59


You have to deposit $189.59 in the account every 4 weeks (every month) for 45 years.
So you have to make 12*45 = 540 of these payments into the account to accumulate $1,000,000.