Question

Suppose you want to have $400,000 for retirement in 35 years. Your account earns 9% interest. a) How much would you need to deposit in the account each month? b) How much interest will you earn? $​

Answer 1

9514 1404 393

Answer:

  a) $135.97

  b) $342,892.60

Step-by-step explanation:

a) The attached spreadsheet shows the use of the "payment" function for determining the amount of a payment that will give the desired future value. It shows the deposit needs to be $135.97 per month.

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b) The interest earned is the difference between 420 payments and the account balance. The interest amount is $342,892.60.