How much more would you need to deposit at the end of every month to accumulate...

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Question

Answer 1

Answer #1

If interest rate is 4.5% p.a. compounded annually,
Monthly interest rate (i) = (1+4.5%)(1/12)-1 = 0.3675% per month

Amount to be accoumulated that is Future Value (FV) = $289,500

No of monthly payments (N) = 22 years x 12 = 264

Amount to be deposited each month (PMT) = ?

Using financial calculator or PMT function in excel,

Amount to be deposited each month (PMT) = $ 651.20

Total amoun deposited over the period of 22 years = $651.20 x 264 = 171,917

If interest rate if 4.5%p.a. compounded monthly,
Monthly interest rate (i) = 4.5%/12 = 0.375% per month

Amount to be accoumulated that is Future Value (FV) = $289,500

No of monthly payments (N) = 22 years x 12 = 264

Amount to be deposited each month (PMT) = ?

Using financial calculator or PMT function in excel,

Amount to be deposited each month (PMT) = $ 643.81

Total amoun deposited over the period of 22 years = $643.81 x 264 = $ 169,966

Total amount paid more over the period of 22 years = $171917-$169,966 = $1,951

Thumbs up please if satisfied. Thanks :)

Comment if further doubts in above.

Answer 2

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