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ale4655 [162]
3 years ago
11

You want to retire exactly 35 years from today with $2,020,000 in your retirement account. If you think you can earn an interest

rate of 10.35 percent compounded monthly, how much must you deposit each month to fund your retirement?
Business
1 answer:
kompoz [17]3 years ago
4 0

Answer:

Monthly deposit= $485.93

Explanation:

Giving the following information:

You want to retire exactly 35 years from today with $2,020,000 in your retirement account.

interest rate= 10.35 percent compounded monthly

First, we need to calculate the monthly interest rate.

Monthly interest rate= 0.1035/12= 0.008625

Now, using the following formula we can calculate the monthly deposit:

FV= {A*[(1+i)^n-1]}/i

A= monthly deposit

Isolating A:

A= (FV*i)/{[(1+i)^n]-1}

n= 35*12= 420

A= (2,020,000*0.008625) / [(1.008625^420)-1]

A= $485.93

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