Question

You want $6,000 per month in your retirement. You expect to retire 40 years from today. At the time you retire, you want the payments to be at the beginning of the month and want them to last 30 years or 360 months. You expect an annual interest rate of 5% during retirement. You need to save to obtain this retirement. How much per month at the end of each month do you need to save for the next 480 months in order to obtain the money needed for retirement? During your saving period you expect to earn 8% annually. Select the best answer.

Group of answer choices

$268 per month

$321 per month

$817 per month

$1,242 per month

$1,561 per month

Answer 1

rate positively ..

	This is two step problem
	Step : 1
	comutation of Present value of 40 year annuity
	Set the calculator at BEGIN mode
	Put in calculator -
	FV		0
	PMT		-6000
	N		360
	I	5%/12	0.4167%
	compute PV		$1,117,689.70
	Step 2
	compute monthly contribution required
	Put in calculator -
	FV		$1,117,689.70
	PV		0
	I	8%/12	0.667%
	N		480
	compute PMT		($321)
	Therefore monthly contribution required =				$321 per month