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You want to have $3 million when you retire in 38 years. You feel that you...

You want to have $3 million when you retire in 38 years. You feel that you can save $670 per month until you retire. What APR do you have to earn in order to achieve your goal?

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Answer #1

Desired sum = $3,000,000
Monthly saving = $670
Time period = 38 years or 456 months

Let monthly interest rate be i%

$3,000,000 = $670 * FVIFA(i%, 456)

Using financial calculator:
N = 456
PV = 0
PMT = -670
FV = 3000000

I = 0.792%

Monthly interest rate = 0.792%
Annual interest rate = 12 * 0.792%
Annual interest rate = 9.50%

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