Question

You plan to work for 40 years and then retire using a 25-year annuity. You want to arrange a retirement income of $3500 per month. You have access to an account that pays an APR of 6.0% compounded monthly. This requires a nest egg of $543,224.02. What monthly deposits are required to achieve the desired monthly yield at retirement?

Answer 1

Answer:

A =$ 543,224.5

Step-by-step explanation:

Given,

plan to work for = 40 years

P = $3500 per month

APR = 6 % = $\dfrac{0.06}{12}$

n= 12 × 25 = 300

$A = \dfrac{P}{r}[1-(1+r)^{-n}]$

$A = \dfrac{3500}{\dfrac{0.06}{12}}[1-(1+\dfrac{0.06}{12})^{-300}]$

A =$ 543,224.5

so, the deposits are required to achieve the desired monthly yield at retirement A =$ 543,224.5