Suppose you want to have $400,000 for retirement in 20 years. Your account earns 10% interest....

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Suppose you want to have $400,000 for retirement in 20 years. Your account earns 10% interest....

Suppose you want to have $400,000 for retirement in 20 years. Your account earns 10% interest. How much would you need to deposit in the account each month?

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Answer 1

Answer #1

The amount is computed as shown below:

Future value = Monthly deposit x [ [ ( 1 + r )^t - 1 ] / r ]

$ 400,000 = Monthly deposit x [ [ (1 + 0.10)²⁰ - 1 ] / 010 ]

$ 400,000 = Monthly deposit x [ 57.27499949]

Monthly deposit = $ 6,983.85 Approximately

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Answer 2

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