SOLUTION: If an individual determines that they would like to retire in 20 years with $500,000 as the future value that is in their IRA, which earns 6% compounded monthly, how much money (ro

Algebra ->  Finance -> SOLUTION: If an individual determines that they would like to retire in 20 years with $500,000 as the future value that is in their IRA, which earns 6% compounded monthly, how much money (ro      Log On


   

Question 1177664: If an individual determines that they would like to retire in 20 years with $500,000 as the future value that is in their IRA, which earns 6% compounded monthly, how much money (rounded to the nearest cent) should they be putting away into the account each month?
Please explain to me step-by step with the calculations!

Homework question from Hans Beauvoir

Answer by Theo(13342) About Me  (Show Source):
You can put this solution on YOUR website!
use the following financial calculator.
https://arachnoid.com/finance/index.html

inputs are as shown below:



output is as shown below:



since you are making monthly payments, the number of time periods is 20 * 12 = 240 months and the interest rate per month is equal to 6/12 = .5

after you make the inputs, you click on pmt and it tells you what the payment amount needs to be.

payment is made at end of each time period unless otherwise specified.