Question 1140928: If you deposit $400 each month into a retirement account that earns 6% interest rate compounded monthly. How long will it take to have 1,000,000 to retire with?
please and thank you
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! present value = 0
future value = 1,000,000
interest rate = 6% per year / 12 = .5% per month.
payment per month is equal to 400 dollars.
payment is made at the end of each month.
stick that in your financial calculator and have the calculator tell you what the number of months needs to be.
i did that with my TI-BA-II calculator and i got 521.8582002 months.
divide that by 12 and you get 43.48651668 years.
an online calculator that can do the same thing, except for the fact that it rounds the answer to the nearest penny can be found at https://arachnoid.com/finance/
i gave it the same inputs and this it what it gave me back.
my inputs were everything except the time periods.
the time periods are what the calculator returned after i clicked on np.
if you enter the payments as negative, then you have to enter the future value as positive, and vice versa.
the calculator is programmed to work that way.
the interest rate is entered as a percent.
if the time periods are months, then the interest rate per year is divided by 12 to get the interest rate per month and the number of years is multiplied by 12 to get the number of months.
in this problem, the calculator told you the number of months and you have to divide that by 12 to get the number of years.
any questions, write to dtheophilis@gmail.com
|
|
|
