Stacy and Michael plan to retire in 40 years. How much do they need to deposit...
Stacy and Michael plan to retire in 40 years. How much do they need to deposit each month in a sinking fund in order to have $750,000 when they retire if they earn 4.8% compounded monthly. Please show work. Thanks you
Homework Answers
where r is the rate of Interest for one compounding period i.e. 4.8%/ 12 = 0.4% OR 0.004
n is the no of compounding periods i.e. 40 year * 12 = 480 periods OR months
750,000 = Periodic Payment * 1448.7213963
Periodic Payment = 750,000 / 1448.7213963
Periodic Payment = 517.70 OR $ 518
He needs to Deposit 517.70 OR $ 518 every month to get 750,000 at the end of 40 years.
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