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8. Repeat Exercise 6 with a desired retirement amount of $1,500,000.

Marilyn wishes to retire at age 65 with $2,000,000 in the bank. At the age of 21. she decides to begin depositing money into

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Answer #1

Question 6.

Future value = FV = 2000000

Time = N = (65 years – 21 years) x 12 months = 44 x 12 = 528

Rate per month = R = 11%/12 = 0.00916667

Payment per month = Pmt = ?

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Formula:

PMT = FV x R% / ((1+R%)^N-1)

PMT = 2000000*0.00916667 / ((1+0.009166667)^528-1)

PMT = $149.40

Monthly saving of $149.40 is required to reach the goal.

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Question 8.

Future value = Required money in future = FV = 1500000

Time period = N = (65 years – 21 years) x 12 months = 44 x 12 = 528

Rate per month = R = 11%/12 = 0.00916667

Payment per month = Pmt = ?

------

Formula:

PMT = FV x R% / ((1+R%)^N-1)

PMT = 1500000*0.00916667 / ((1+0.009166667)^528-1)

PMT = $112.05

Monthly saving of $112.05 is required to reach the goal.

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