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3 years ago

Suppose you want to have $800,000 for retirement in 20 years. your account earns 5% interest compounded monthly.

1 answer:

5 0

The formula of the future value of an annuity ordinary is
Fv=pmt [((1+r/k)^(kn)-1)÷(r/k)]
Fv future value 800000
PMT monthly payment?
R interest rate 0.05
K compounded monthly 12
T time 20 years
Solve the formula for PMT
PMT=Fv÷[((1+r/k)^(kn)-1)÷(r/k)]
PMT=800,000÷(((1+0.05÷12)^(12
×20)−1)÷(0.05÷12))
PMT=1,946.31 per month

Interest earned
800,000−1,946.31×12months×20 years
=332,885.6

Hope it helps!

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