Question

You have a goal of saving to build up a nest egg of $625,357.24, and you are going to make regular deposits to an account that pays an APR of 7.2% compounded monthly. What monthly deposits are required to reach this goal in 40 years? (Round your answer to the nearest cent.)

Answer 1

The monthly deposit required to save up to $625,357.24 (future value) in 40 years at a 7.2% APR is $225.20.

What is the monthly deposit?

The monthly deposits are the periodic savings that the investor must make to achieve future value.

The monthly deposit is compounded at the monthly annual percentage rate (APR).

We can compute the required monthly deposits using an online finance calculator as follows:

N (# of periods) = 480 months (40 years x 12)

I/Y (Interest per year) = 7.2%

PV (Present Value) = $0

FV (Future Value) = $625,357.24

Results:

Monthly Deposits (PMT) = $225.20

Sum of all periodic payments = $108,096 ($225.20 x 480)

Total Interest = $517,261.24

Thus, to save $625,357.24 in 40 years, you need to deposit $225.20 monthly.

Learn more about periodic deposits (payments) at brainly.com/question/13031679

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