Homework Answers
Number of months to retirement = n = 42*12 = 504
Future Value of amount required = FV = $3250000
Monthly Interest rate = r = 0.10/12
Let The amount deposited each month be P
Hence, FV = P(1+r)n-1 +....+ P(1+r)2 + P(1+r) + P = P[(1+r)n -1]/r
=> 3250000 = P[(1+0.10/12)504 -1]/(0.10/12)
=> P = 3250000*(0.10/12)/[(1+0.10/12)504 -1]
= $419.66
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