Question

Bonnie has decided to begin a retirement savings program where she will contribute to an account that wil accumulate tax tree throughout her working demount of S00000 when she thosheruereremanje . She expects to retire in exactly 6 years from Isday and her goal is to have In order to meet h ow she will begin in MONTHLY contr a el con devoted to the retirement goal Contr monthly amounts into her retirement count for the next years. What minimum amount needs to be placed in the end a to this account will begin one month from today, and we will continue placing equal each month o t her reach her goal the annual interest rate is 6% nection Pace your answer to the need. Work can singles six decimal point of Boy DO NOT USE A DOLLAR SIGNORA COMMAN YOUR ANSWER

Answer 1

Future value of annuity = P * [(1 + r)ⁿ - 1] / r,

where P = periodic payment.  

r = periodic rate of interest. This is (6%/12). We divide by 12 since we need to convert the annual rate into monthly rate)

n = number of periods. This is 6 * 12 = 72 (there are 72 months in the 6 year period)

The required future value of the account is $700,000.

Future value of annuity = P * [(1 + r)ⁿ - 1] / r,

$700,000 = P * [(1 + (6%/12))⁷² - 1] / (6%/12)

P =  $700,000 * (6%/12) / [(1 + (6%/12))⁷² - 1]

P = $8,101.02

The amount to deposit in account each month is $8,101.02