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mafiozo [28]
3 years ago
15

You have determined that you will need to accumulate​ $1,000,000 in your retirement account in order to cover your inflation adj

usted shortfall. Which of the following is closest to the amount of money you would need to put into a tax deferred retirement account every year if you plan on retiring in 40​ years? Assume an​ 8% average return on this​ account, and that it is empty today.
Business
1 answer:
spayn [35]3 years ago
7 0

Answer:

$3,860 will be needed to put into a tax-deferred retirement account every year if you plan on retiring in 40 years

Explanation:

Use Following formula to calculate the monthly payment required.

FV = P x [ ( ( 1 + r )^n ) - 1 ) / r ]

FV = Future Value = $1,000,000

R = RATE OF RETURN = 8%

N = NUMBER OF YEARS = 40 YEARS

P = Monthly Payment

$1,000,000 = P x [ ( ( 1 + 0.08 )^40 ) - 1 ) / 0.08 ]

$1,000,000 = P x [ ( ( 1.08 )^40 ) - 1 ) / 0.08 ]

$1,000,000 = P x 259.06

P = $1,000,000 / 259.06

P = $3,860.16

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