SOLUTION: Suppose you want to have $600,000 for retirement in 20 years. Your account earns 10% interest. a) How much would you need to deposit in the account each month? $ b) How

Algebra ->  Finance -> SOLUTION: Suppose you want to have $600,000 for retirement in 20 years. Your account earns 10% interest. a) How much would you need to deposit in the account each month? $ b) How       Log On


   

Question 1206311: Suppose you want to have $600,000 for retirement in 20 years. Your account earns 10% interest.
a) How much would you need to deposit in the account each month?
$

b) How much interest will you earn?
$
Answer by MathLover1(20850) About Me  (Show Source):
You can put this solution on YOUR website!



FV+=+M%2A+%28%281+%2B+r%2Fm%29%5E%28mt%29+-+1%29+%2F+%28r%2Fm%29%29
Here,
FV is the future value =600000
M is the monthly deposit=?
r%2Fm+is the monthly interest rate =10%/12+= 0.01%2F12
mt is the number of periods (20+years * 12 months =+240+months)

a) How much would you need to deposit in the account each month?
600000+=+M%2A+%28%281+%2B+0.10%2F12%29%5E240+-+1%29+%2F+%280.10%2F12%29%29
600000+=+M%2A+%286.32807363324973007199593+%2F+0.008333333333333333%29
600000+=+M%2A+759.368835989967639

M=600000%2F759.368835989967639
M%E2%89%88790.13

b) How much interest will you earn?
you will deposit total of
240%2A790.13=189631.2
interest earned
600000-189631.2=410368.8