You would like to set up an annuity so that, after you retire, you can take out the interest from the maturity value every month to pay living expenses (you predit that you will need $1200 every month). If you start saving 20 years before retirement into an account paying 6% interest, how large of a monthly payment will you need to make?
Monthly interest rate = 6%/12 = 0.005
The maturity value should be = Interest/Monthly interest rate
The maturity value should be = 1,200/0.005
The maturity value should be = 240,000
Now, let's find the monthly payments to have the maturity value = $240,000
We will need to make a monthly payment of $519.4345403493
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You would like to set up an annuity so that, after you retire, you can take...
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I really do not understand this... please help with
explanations. thank you so much in advance!
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