Question 1191371: Suppose you want to have $600,000 for retirement in 30 years. Your account earns 10% interest. How much would you need to deposit in the account each month?
Found 2 solutions by CPhill, ikleyn:
Answer by CPhill(1987)   (Show Source):
You can put this solution on YOUR website! You would need to deposit approximately $361.43 each month to have $600,000 in 30 years, assuming a constant 10% annual interest rate compounded monthly.
Answer by ikleyn(52879)  (Show Source):
You can put this solution on YOUR website! .
Suppose you want to have $600,000 for retirement in 30 years. Your account earns 10% interest.
How much would you need to deposit in the account each month?
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Regarding the post by @CPhill, without formulas and explanations, it has zero educational value.
Besides this, the value, presented as the answer in his post, is factually incorrect.
I came to bring a correct solution.
I will assume that an ordinary annuity is considered, i.e. deposits are made at the end of each month.
Then the formula for the monthly deposited amount P is
P =  ,
where FV is the future value; r is the effective monthly rate presented as a decimal;
n is the number of payments/deposit.
In this problem, FV = $600,000; r = 0.1/12; n = 30*12 = 360. So,
P =  = 265.43 (rounded to the closest greater cent).
ANSWER. You need to deposit $265.43 at the end of each month.
Solved correctly.
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